Question

write 1-2 paragraphs discussing what the Solow and endogenous growth models mean for The United States. What should policymakers consider in order to encourage economic growth in the county?

Answer 1

Based on Endogenous growth model economic growth of USA is set of internal factors like capital investment, policy decisions, expanded workforce population, etc. Thus, US must focus on implementing structural reforms and policies which lead to exponential growth in future.

To encourage economic growth the Government must reduce taxes, induce higher government soending, encourage private spending while central banks must cut down interest rates amd reserve requirements and pursue bond buying programmes through OMO to boost liquidity which consequently leads to rise in aggregate demand and thus, rise in economic output.

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