Evaluate the extent to which policies to increase economic growth may conflict with the objectives of other policies (20)

Economic growth is an increase in the sum values of all goods and services produced in an economy over a year. To increase this the government may undertake expansionary fiscal policy, by raising spending on capital infrastructure projects such as HS2.This may increase the derived demand for labour, as workers are needed to lack the tracks. This lead to a rise in income, leading to a rise in the amount of goods and services that a household can buy, and rise in the consumption element of AD,  but also leading to a rise in demand for foreign luxury goods, as more people have higher levels of discretionary income, and so can afford these goods, worsening the balance of payments, as value of imports increase.
To achieve the economic growth, the government may lower the corporation tax (tax paid by businesses on profit). This will cause an increase in the investment in the country, increasing the I part of AD, causing a rise form AD to AD1 and therefore economic growth, and this may increase employment, a workers are needed to construct the new factories. This may cause a fall in unemployment.
However, the investment may be in machinery that will replace workers, so long term unemployment will rise.
The BoE may loosen monetary policy with lower interest rates, which are the cost of borrowing and rewards for saving. This makes credit cheaper, leading to an increase in demand for consumer durables, as they are interest rate sensitive, leading to a rise in the consumption element of AD, and causing AD to rise to AD1 However, this may lead to an increase in inflation(a sustained rise in prices in an economy over time) as prices rise from P to p1, due to demand pull inflation, which may rise above the 2% target of the BoE.
However, if the economy is emerging from a recession they will be on the elastic part of LRAS so will have unused resources, such as unemployment and unused machinery and so there will be no/low inflation demand full inflation.
 The government may undertake supply side policies, any policy to increase quality and quantity of factors of production. This may include training schemes to increase the productivity of labour, making them more effective. This will increase the productive capacity of the economy, as workers are now more skilled, increasing elasticity of LRAS and therefore long term growth, but will cost the government money, as they must employ teachers. This means that government spending will increase, and may increase the deficit. 
However, the government may collect additional revenue from those working and so they may increase the income tax receipts, so government revenue may rise more than than the cost of training.