Evaluate means weighing the strengths against the limits, and judging.
What supply-side policies do well
Long-term growth
More capacity: the economy can produce more for years.
Lower inflation
Output grows with demand, so prices need not rise.
Fewer structural unemployed
Training gives workers the skills firms want.
Competitiveness
Lower costs make exports cheaper abroad.
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Remember it as: More capacity: more output, steady prices.
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The same policies have costs and blind spots.
Their limits
Time lags
A new school pays off when its pupils start work, a decade later.
Cyclical unemployment
In a recession firms lack buyers, not skilled workers.
Equity
Weaker unions and lower benefits can widen income gaps.
Cost and the environment
Interventionist spending raises debt; more output can mean more pollution.
The points to remember
- Write it like this: "Supply-side policies work in the long run; they do little against cyclical unemployment in a recession."
- Interventionist ones cost money; market-based ones risk inequality.
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Each kind has its own strength and its own risk.
Market-based
- Strength: no cost to the budget; often raises tax revenue.
- Limit: can widen inequality and cut worker protection.
- Germany, 2003-2005 reforms: unemployment fell from about 11% in 2005 to about 6% by 2015, but many took low-paid mini-jobs.
Interventionist
- Strength: targets the gaps the market leaves, such as skills and roads.
- Limit: costs the government money and takes years.
- Singapore's SkillsFuture (2015) pays adults to retrain, at a cost to the budget.
The points to remember
- Name one real example for each side.
- The best answer often combines both kinds with demand-side policy.
Paper 1 asked this in November 2024, as part (b) for 15 marks.
Using real-world examples, evaluate whether the benefits of supply-side policies for the economy will always outweigh their limitations.
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How the 15 marks are given
| Marks | What your answer needs |
|---|---|
| 13–15 | Theory fully explained, terms right all the way through, balanced evaluation, real examples fully developed to support the argument |
| 10–12 | Theory explained, terms mostly right, evaluation mostly balanced, real examples developed |
| 7–9 | Theory partly explained, some evaluation but one-sided, examples partly developed |
| 4–6 | Theory only described, evaluation superficial, examples only named |
| 1–3 | Theory stated but not relevant, no evaluation |