2. Economic Performance - Economic Growth, Policies to promote it Flashcards Preview

Economics - MacroEconomics > 2. Economic Performance - Economic Growth, Policies to promote it > Flashcards

Flashcards in 2. Economic Performance - Economic Growth, Policies to promote it Deck (5)
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1
Q

What did the government need to do to improve short run economic growth?

A

Boost aggregate demand

2
Q

What policies could the government use to promote short run economic growth?

A

Expansionary monetary policy or expansionary fiscal policy could be used to boost aggregate demand.

3
Q

What are the potential problems with the policies to promote short run economic growth?

A

They may create demand pull inflation, this will depend on initial level of economic activity (where you are when your SRAS curve)

4
Q

What are the possible government policies to promote long run economic growth?

A

Using supply-side policies to boost the PPF outwards.

5
Q

What are the potential problems with the policies to promote long run economic growth?

A

They’re very expensiveThey take time to workThere’s no guarantee they’ll workDepends on the initial level of economic activity

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