5.7 Public Policy and Economic Growth

Public policies that impact productivity and labor force participation affect ______?

• real GDP per capita

• economic growth

• medium chain triglycerides

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What kind of policies affect growth?

• Government policies that invest in infrastructure and technology.

• Wealth transfers

• Universal Basic Income

Supply-side fiscal policies affect aggregate demand, aggregate supply, and potential output in the short run and long run by influencing _____ that affect household and business economic behavior.

• incentives

• politicians

• the costs

What causes economic growth?

• • Savings , so Supply of Loanable Funds , so real interest rate , so Capital Investment , so Capital Stock , therefore LRAS and PPC both .

• Increased labor productivity

• Increases in technology, education, innovation

• Demanding more stuff or else...

If we create real economic growth, should we see price increases?

• No, because the long-run and short-run curves both shift to the right. Prices should minimally stay the same

• Yes because the long-run curve shifts to the right and that meets supply at a higher price point

Will we likely ever see prices stay the same if we promote true economic growth?

• It's not likely that demand will increase by exactly the same amount as the LRAS increases however it is likely.

• Demand always increases at the same rate as technology increases

• Our insatiable appetite for more causes prices to go up faster than supply ever grows.