EBK ECONOMICS: PRINCIPLES AND POLICY
EBK ECONOMICS: PRINCIPLES AND POLICY
13th Edition
ISBN: 8220100605932
Author: Blinder
Publisher: Cengage Learning US
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Chapter 24, Problem 1DQ
To determine

The objectives of long-run growth policy andshort-run stabilization policy.

Expert Solution & Answer
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Explanation of Solution

Major objective of long-run economic growth includes capital formation, human capital investment such as education and training, and progress in new technology. Such policies aim to increase the market value of goods and services over a period of time by shifting of production function to the right. This ensures higher economic growth rate in the economy. The stabilization policies include the intervention with the expansionary and contractionary policies to stabilize the economy when the economy moves below and above the potential level of real GDP in the short run. Hence, it controls the higher unemployment or inflation will not be a problem.

Economics Concept Introduction

Economic growth: Economic growth refers to an increase in the market value of goods and services over a period of time in an economy.

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