Policies to Generate Economic Growth (CIE IGCSE Economics)

Many taxes on imports (import tariffs) are eliminated

Costs of production for firms are reduced & they can produce more goods/services at lower prices - which will increase total demand

Subsidies are provided to manufacturers of electric cars

Car manufacturers are able to produce their cars more cheaply & sell them at lower prices - which will increase total demand

A government increases the level of unemployment benefits

Unemployed workers have more income available & increase their consumption - which will increase total demand

A government creates a free port zone

Both multi-national & domestic companies are incentivised by the low/no tax promise & seek to invest in free port zones - which will increase total demand

A government announces that it will build 14 new schools in the next financial year

Building companies have to be employed & building materials consumed which is all paid for by the government - & will increase total demand

The housing market is subdued & so the Central Bank lowers interest rates by 1%

With cheaper loans now available, house buyers demand more loans to purchase properties & to renovate/furnish the properties - consumption increases & total demand increases

The Central Bank intervenes in the exchange rate to depreciate it

• The nation's currency is now cheaper for foreigners to purchase and this boosts exports, which will increase total demand

The Central Bank commits to a new Quantitative Easing program of $75bn a month

Commercial banks, firms & private investors receive this money as the government purchases their bonds - they use some of it to invest & consume resulting in greater total demand

The Government reduces the level of welfare benefits

People who rely on benefits for survival are more likely to make themselves available for work. With more workers in the economy there can be a higher level of output & economic growth

The Government launches a new 'Education & Training' fund to help fund University students studying artificial intelligence (AI)

This provides a pool of skilled labour in AI & helps to grow a new industry resulting in greater national output & economic growth

The Government decides to remove quotas on all imports

The removal of this protection lowers prices & encourages more competition leading to higher output & economic growth

The Government decides to build an additional  runway at the national airport

An additional runway means that more planes can land which generates more economic activity (e.g. transport of goods/services) leading to higher output & economic growth