-Designed to increase quantity of resources (i.e. labour, land, capital) so that more goods and services can be produced at each price level. This will increase the aggregate supply of the economy.
1. Size of the labour force
Labour force refers to human resources needed in production. Growth in size of labour force is partly determined by amount of new workers every year. This comes from natural births within the resident population or foreign migrant labour. The government also encourages older people to stay in the workforce through increasing the retirement age and get non-working parents to actively look for work.
2. Land and natural resources
This refers to the geographical space as well as non-human natural resources needed in production. Discovery and recovery of new natural resources like oil reserves or mineral deposits can thus increase the amount of input into the economy, so output will increase too. Land reclamation from the sea or desert means more usable land for agriculture, industrial or commercial activities so more factories, farms and buildings can be build which increase productive capacity of an economy.
3. Investment in private capital stock
Capital is a key man-made (non-natural) resource that is needed in production. Changes in the stock of capital will alter the amount of goods and services that can be produced in the economy. Private capital investment increases the quantity of capital stock for consumers like factories, plants, equipment and machines for these factories.
4. Investment in infrastructure (social capital)
Government investment in infrastructure consists of investing in transport networks like roads and rails to increase the efficiency of transport of raw materials to manufacturing plants and telecommuniciations networks. This will increase productive capacity of the economy as a whole.
5. Measures to encourage small business start-ups / entrepreneurship
Promote an entrepreneurial culture so as to increase the rate of new business start-ups. Small business today can develop to become large companies in the future, adding new players into the market so with more producers in the economy, the aggregate supply of all goods and services will increase.
Examples of policies include: loan guarantees for new businesses; regional policy assistance for entrepreneurs in depressed areas of the country; advice for new firms
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