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Chapter 4
Achieving policy objectives
9.1 Engineering a recovery from a recession
 Cut interest rates
 Run budget deficit (G > T)
9.2 Enabling long term growth
Supply-side policies
 Increase the availability and
quantity of skilled labour
 Encouraging research and
development
 Modernisation of the transport
system
 Provides smaller firms with
assistance
 Deregulation of markets
Other policies
 Regional development grants
 Protectionist measures
 Boosting confidence
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Can be explained either as boosting AD and/or
by increasing the money supply
Will boost AD but have to watch for the knock-
on effects of how the deficit is financed.
e.g. Training schemes, childcare vouchers,
changing the income tax and benefits systems
e.g. government sponsorship of university
research in cutting edge technologies
e.g. to enhance the distribution networks of
firms
e.g. advice on exporting
Frees up capital and enterprise
To boost investment
To reduce imports e.g. via quotas
e.g. by keeping inflation low