Study notes

Fiscal Policy - Impact on Aggregate Supply and Economic Growth

  • Levels: AS, A Level
  • Exam boards: AQA, Edexcel, OCR, IB, Other

Fiscal policy can have important effects on the supply-side of developed and developing countries.

Labour market incentives:

  1. Changes in income tax can improve incentives for people to actively look for work
  2. Lower taxes might also have a positive effect on work effort and labour productivity

2.Capital spending:

  1. Spending on infrastructure provides the capacity needed for other businesses to flourish.
  2. Lower rates of corporation tax might attract inward investment from overseas

3.Entrepreneurship and investment:

  1. Government spending can be used to fund an expansion in new small business start-ups

4.Research and development and innovation

  1. Government spending and tax allowances could be used to encourage research
  2. Tax incentives can be used to stimulate investment in low carbon technologies

5.Human capital of the workforce:

  1. Spending on education and increased investment in health and transport can also have important supply-side effects in the long run
  2. Government spending can help to improve human capital, employability and productivity 
Taxation and aggregate supply
Job board

Part-time Maths Teacher

St Aidan's Church of England High School, Harrogate, North Yorkshire

Join the tutor2u community

With a tutor2u account you can access extra features to support your teaching & learning.

Subscribe to the daily digest

Curate your own content

Track your training schedule

Manage your resource library

Receive job alerts

Join the community

Already joined? Sign in now ›

More From the Digital Store

The full course resource pack for our popular Fast-Track Your Planning AQAl A Level Economics (Year 2).course. Packed with dozens of superb teaching & learning ideas and approaches, with ready-to-use resources...

£75.00 (+VAT)

Fast Track Your Planning for AQA A Level Economics (Year 2) - Course Resource Pack

Comprehensive, topic-by-topic study notes for the Year 2 teaching content of the OCR A Level Economics specification.

£100.00 (+VAT)

OCR A Level Economics (Year 2) Course Companion

Topic-by-topic editable PowerPoints on all the key topics for the Year 2 teaching content for OCR A Level Economics

£100.00 (+VAT)

OCR Economics (Year 2) Teacher Topic PowerPoints

Recruitment

Advertise your vacancies with tutor2u

Much cheaper & more effective than TES or the Guardian. Reach the audience you really want to apply for your teaching vacancy by posting directly to our website and related social media audiences.

Find our more ›

Advertise your teaching jobs with tutor2u