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Economics - Policies Summary - Government Objectives (Economic Growth…
Economics - Policies Summary - Government Objectives
Economic Growth
Fiscal
Low Growth
Use expansionary fiscal policy
Lower taxes
Increase government spending
This will grow the economy and create jobs
Budget deficit
High growth
Increase taxes
Decrease government spending
This will slow the economy and extra income will be saved
Monetary
Low growth
DO NOTHING
High growth
Lower interest rates leads to higher spending and will lead to faster economic growth
Supply-side
Low growth
Subsidies
Reduce taxes on workers
High growth
Reduce power of trade unions
Developing infrastructure
Low Inflation
Supply-side
Fiscal
Low inflation
To achieve price stability with low inflation:
Budget surplus
Increase government spending
High inflation
To achieve price stability with high inflation:
Budget deficit
Decrease government spending
Increase taxation
Monetary
Healthy balance of payments
Fiscal
Monetary
Supply-side
Fair distribution of income
Supply-side
Fiscal
Monetary
Low unemployment
Fiscal
Monetary
Supply-side