Definition: Government policies which create incentives for individuals and firms to increase their productivity. Supply-side policies are policies that improve the workings of markets. In this way they improve the capacity of the economy to produce and so shift the aggregate supply curve to the right. This should enable the economy to grow in a non-inflationary way. Supply-side policies are usually advocated by classical and monetarist economists who believe that free markets are the most important factor determining economic growth. Supply-side policies may include improving education and training, reducing the power of trade unions, removing regulations and so on.