Light regulation promotes growth and reduces shock persistence. Monetary policy: Change the interest rate and affecting the supply of money (e.g. Productivity growth may increase if the government were to remove unnecessary barriers to entrepreneurial ability (such as excessive red tape, rent seeking, bribery and corruption at all levels) and the people with entrepreneurial skills make intensive use of those skills. No doubt personal and business tax cut should increase aggregate supply and, therefore, produce non-inflationary real output growth. Aging may slow economic growth in advanced economies (photo: Zero Creatives Cultura/Newscom). Only one particular saving rate generates the Golden Rule steady state, i.e., the rate which maximises consumption per worker and, thus, economic well-being. However, if the economy is already close to full capacity (trend rate of growth) a further increase in AD will mainly cause inflation. Economic growth is measured by an increase in gross domestic product (GDP), which is defined as the combined value of all goods and services produced within a country in a â¦ This led to the Barber boom – rapid economic growth. According to the Solow model only sustained growth in productivity can lead to continuing improvement in output and consumption per worker. These attempt to increase productivity and efficiency of the economy. Here we detail about the ten major economic policies which are followed in India and has played a major role in the growth of Indian economy. In general, the conduct of So the aim of government policy should be to eliminate wasteful or outdated regulations and to make necessary regulations more efficient and flexible. through quantitative easing). So it is necessary for the government to generate a surplus in the budget to ensure that public saving is positive. 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