while having an assistant plaster policies let's evaluate them that's what's good what's bad and what the owner effect depends on supply-side policies at least in theory improve all the government's macroeconomic objectives they promote higher growth higher actual growth and higher potential growth which is great they reduce unemployment they reduce inflation in the economy and they improve the trade position which is all great they also stimulate aggregate demand and aggregate supply most of the policies start with an increase in government spending to improve education and training if I previously there I didn't actually write all of that out but you can see from those policies most of them involve an increasing government spending or reduction in tax both of which will also increase short-term economic growth which will increase a great demand so although the intention is to increase aggregate supply there will be an improvement in aggregate demand as well which is a great things we're going to see an increase in actual growth and an increase in potential growth whoop-dee-doo is amazing at the same time supply-side policies are sustainable they're not inflationary so one of the main drawbacks with demand-side policies is that what they're not really sustainable we can't do the forever because you get to a point where inflation must be rampant where a supply-side policies they are sustaining we can do it forever as long as you want you're open to suffer from increases in inflation they are non-inflationary policies so that's very very good but there are drawbacks like I said in the last video nothing is perfect in economics there are always some problems and these are the problems with supply-side policies one they're very very expensive for I don't underestimate you I don't understand they are properly expensive we're talking to the billions of pounds or some of these policies so very expensive it any's only talked about expense in economics we can bring in the opportunity cost argument so because it's so expensive the costs over to the government there is a massive opportunity cost could that money have best been used elsewhere to maybe improve police services to improve in the allocation of merit goods to to improve many education and health care is there something out of it could it have been used elsewhere that's the question though intense there is an opportunity cost here the sentiment why does that money come from has it been borrowed in which case mmmm hmmm maybe there have any burdens on future generations has it come away from the provision of American goods or something in which case you know was that actually a good decision or not so there's a lot to to analyze it the first point there they're taking a long time to work let's take one example let's take the improvement in education and training well if the government decides to reform the education system to try and reform public examinations it might take 15 years before there is an effect on the productivity of people before there is an effect on the improvement in education of the ordinary working folk so it might take a very very long time to actually see an effective social supply-side policies some supply-side policies take a lot longer to work than others do after that bloom Annelle there is no guarantee they actually will work sounds great in theory all those policies we talked about but no guarantee they're going to work at all who's to say that when you cut corporation tags businesses will invest who's to say that when you provide subsidies to firms that they are going to use that money to risk to get themselves involved in research department who's descending to do it they might actually just give that money to shareholders instead there's no guarantee that these policies will work in the way that they are intention to work at the same time they might be in if in fact they will be ineffective if there is a lot of spare capacity in the economy picture the diagram in your head when there is loads of spare capacity what's needed is an increase in demand not an increase vagrant supply the problem with a large one is back capacity is that by imposing supply-side policies there is not going to be an improvement in actual growth at all if that will be nothing will go on in the economy all that will improve is that they'll be more faster production it doesn't necessarily mean of an increase in actual growth so remember for the depends on point for supply side policy to be effective the economy must be reasonably close to full employment levels of output otherwise what's the point of increasing our will seem point of increasing potential output from what's needed in the economy is an increase in actual output so that's important about valuation point to develop in your exam if we're in a deep recession for example we need a boost in Tibet we don't need a boost in every supply so the level of economic activity is important in determining whether supply-side policies are needed or demand some policies are needed to work in between the shorter I hope that helps with actually a question on supply-side policies a great questioner that comes up for you to ace all the best I'll see you next time thank you very much