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Economics (Year 12)

Concept of Productivity

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Christian Bien

What is it?

Productivity is the efficiency to which firms or people convert productive resources into outputs of goods and services.

Supply-Side Economics

Productivity is supply-side economics to which an increase in productivity will increase aggregate supply as more output can be achieved through the same amount of inputs. Governments tend to aim for measures to improve productivity as it will increase aggregate supply which will lower inflation as well as increase economic growth, best meeting the economic policy objectives. To do this, the Australian Government went through and continues to, undergo market-orientated microeconomic reform (MER) to remove any unnecessary regulation that prevents the free flow of resources in a free market. In addition, the Australian Government also has contributed to interventionist microeconomic reform to remove market failure, such as the ACCC ensuring there is fair competition in the market.


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