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Despite being advocated for by economists, the ideals of Growth Policy are not used as frequently...

Despite being advocated for by economists, the ideals of Growth Policy are not used as frequently as Stabilization Policy. Why might this be? Explain. What disincentives does a politician have for using implementing more Growth Policy based incentives? Explain.

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Answer #1

The ideals of the growth policy are not used as frequently as Stabilization policy because ideals of the growth policy have not proved to be successful in eliminating poverty and inequality in the society. The measures of inequality are proving to be worse than before because of excessive inclination towards growth, However, stabilization policy helps in taking care of both growth and poverty in the society and also growth rate of national output in the society. Thus, stabilization policy is used more frequently as compared to growth policy.

For a politican , getting elected to nest elections is one of the goals and if poverty and inequlity increases in the tenure then this is the biggest setback for the politician. Thus, emphasis on growth theory is less and that on stabilization policy is more.

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