What can a government do to promote
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Gross domestic product (GDP), which is the total annual value of all goods and services generated in a country, is the measure by which economic growth is measured. Economic growth is influenced by several factors. However, no one factor continuously promotes the ideal or perfect rate of development needed for an economy. A government can try to influence the rate of economic growth through demand-side and supply-side policies, Taxes are reduced as part of an expansionary fiscal policy to boost disposable income and promote consumption. Lower taxes, however, will result in a larger budget deficit and higher borrowing. When consumer expenditure declines during a recession, an expansionary fiscal policy is most suitable. Interest rate reductions under an expansionary monetary policy can increase domestic demand. The government's primary role is to maintain the political and economic stability necessary for regular economic activity to occur. Political unrest and uncertainty can discourage business ventures and slow economic growth.
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