To what extent can government policies be used to increase economic growth without increasing the rate of inflation

Identify the policies used to increase growth without increasing inflation. The two types of policies the government can use are demand side and supply side policies. We know we want to increase growth so on an AS/AD Diagram we want real output/national income to increase. This means we want policies whereby AS or AD rises as this increases real output. However as we want price level to fall as inflation falls, the most suitable policies would be supply side policies. Hence we want to choose any three supply side policies, draw a diagram and evaluate them. At the end of the essay it is better to summarize. The sturcture of your essay should be as follows:
Intro: Defin key words i.e. Supply side policiesMain body: State 3 types of supply side policies such as education and training, spending on infrastructure, reducing corporation tax. Explain each policy in detail of how they can be used to increase economic growth without increasing inflation. Draw relevant diagram of AS increasing, showing price level falling and real output/national income increasing. Evaluation: Contradict the main points e.g magnitude of each policy or time lag.Conclusion: summarize your essay

Answered by Vishal M. Economics tutor

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