- Education and training.
Government investment in education and training and ecouragement for indutries to increase their training, so the occupational mobility of labour and productivity should raise, thus AS shift right wards.
- Encourage small firms
New, small firms generate employment and ideas to the market, government enourage them by charge them a lower corporation tax .
- decreases direct tax
By deduce direct tax, that is reduce the tax on income. This certainly increses AD, and as well as AS. A lower direct tax might increase incentive to workers and firms. Since their income might increases more if they work over time, and workers to enter or re-enter to labour forces, thus increase in productivity. Firms might invest more as there is a cut in corporation tax.
- National minimum wage.
This might encourage people to enter labout force.
- Reduction in unemployment benefits
A reduction in job seeker`s allowance may force some unempolyed to seek for jobs more actively and some unemployed to accept low rate of wages. By doing this, the negative output gap is reduced, it move closer to full capacity. (A negative output gap diagram can be presented)
- Reduction in trade union power.
This may incresese the efficency of labour markets and reduce the cost of employing labour, thus firms might employ more workers, as a result, output raise.
- Privatisation
Privatisation refers to the public sector tranfers to the private sector. Thus, private firms will be in the best position to make decison what to produce and keep their price at competitive prices.
- Deregulation
It is to removal of some rules , so that firms belief they will have greater freedom to make their own decisions and increase competition as new firms is easier to enter an industry. AS shift to right.
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