Policy And Its Effect On Public Services - 4268 Words

Policy and its effect on Public services Economists employed by the government are involved in implementing policies, which were especially established to meet government s objectives that are very often multidimensional. There are four very fundamental objectives for viable economy, including decreasing the unemployment rates in certain regions, lower or stabilise the inflation, constant economic growth and a satisfactory balance of payments position. The UK economy continues to suffer from a number of underlying structural weaknesses. The government is now set on providing the economic framework, which will enhance the opportunity to raise a sustainable rate of economy growth, (Anderton, 2006). Economic growth also known as†¦show more content†¦There are many questions what arise from the topic of the economic growth. For instance, how can nations speed up their economic growth? There are many successful strategies to self-sustained economic growth. According to Keynesian policy prescriptions, long term growt h can be achieved through structural policies such as supply-side policies, which would improve the long term performance of the economy. Supply-side policies emphasize incentives and tax cuts as a means of increasing economic growth. Such policy was espoused by President Reagan in the USA, but also Prime Minister Thatcher in Great Britain, (Nordhaus Samuelson, 2005). Supply-side economists argue, that high taxes lead people to reduce their labour and capital supply. Arthur Laffer has suggested that the high tax rates might actually lower tax revenues, (Nordhaus Samuelson, 2005). This Laffer-curve preposition holds that high tax rates shrink the tax base because they reduce economic activity. However, mainstream, economists doubt the Laffer preposition that cutting tax rates would increase tax revenues, ref. They believed that there s a need for a radical restructuring of the tax system called supply-side tax cut, REF. According to this philosophy, reform should improve incenti ves by lowering marginal tax rates . This would lead to lowering tax burden on high-income individuals, but also encourage productivity and supply