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Policies to promote Economic Growth (4.6.6), 21648EAB-D627-44C1-B1AF…
Policies to promote Economic Growth (4.6.6)
Demand-side policies
Cutting direct taxes and increase public expenditure
More disposable income and comsuption and savings would increase.
Eg people would want to spend more due to the decrease in taxes.
Aggregate demand increases
Reduce interest rates and increase money supply via quantiative easing
Quantiative easing is a set of monetary policies that is implemented on a central bank in order to increase money supply in and economy.
The Bank of England had used quantiative easing in 2009 during the financial crisis and printed 200 billion pounds.
Economic growth is measured by the rate of increase in real GDP each period
Supply-side policies
Investing in improvement to education and training
More skilled workers which would lead to an increase in income.
Increase in consumption and savings.
Support investments in R&D (Research and development)
Provides important information and insights
Public investment in modernizing existing building and infrastructure
Leads to increase in consumer spending, increased international trades and businesses.
Give tax cut and subsidies to firms
Leads to an increase in income which allows consumer spendings to increase
Encourage MNCs (multinational corporation) to invest in the economy
Promotes economic growth as more money is invested
Privatisation/deregulations/labour market reform
positively affects gdp
