Question

Economic growth is an increase in the production of goods and services. The textbook indicates sources that can improve and encourage productivity, or output per worker, which can sustain economic growth over the long-run. Imagine that you are a new hire for the federal government and you are tasked to propose an idea of how the United States can increase productivity and sustain economic growth.

In at least one paragraph, address the following:

1. Explain your idea.
2. As you have learned, economics embraces trade-offs: the decision of what to do involves a decision of what not to do. What would be some negative repercussions of your idea to our country?

Answer 1

To encourage productivity and sustainable economic growth government must announce series of structural reforms to boost employment opportunities and tax cuts for startups and income tax cuts for citizens to boost disposable incomes and consumption spending. Moreover, automatic stabilizers must be in place along with higher government budget deficits by spending massively on each sector. Government must also encourage private sector spending by giving tjem subsidies and tax rebates.

All these have positive implications however some negative repurcussions like higher government debt, higher inflation, high fiscal deficit can occur which affects future government spending abilities.

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