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An increase of government spending in secondary education will mean that a larger portion of student
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The government has recently announced substantial increases in expenditure on secondary education. Using aggregate demand and supply analysis, examine the consequences of this for macroeconomic policy objectives in both the short and long run. An increase of government spending in secondary education will mean that a larger portion of students would stay on for longer education and become better skilled therefore producing a more productive labour force. While there is no expansion in the UK's total labour supply, there is a large increase in the productive potential of an economy. Increased quality will improve the productivity (efficiency) of labour. As with the product market policies, successful labour market supply side policies will shift the LRAS curve to the right. The same effect can also be illustrated by an outward shift in an economy's production possibility frontier. At first there would be a small leftward shift of the supply curve as more...
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