Answer: Policies for increasing the economic growth rate are 1) Stimulate saving (for instance, tax incentives could be directed at increasing saving which will then increase the capital stock); 2) Stimulate research and development (inventions can be copied, so government subsidies can lead to more inventions that spread throughout the economy); 3) Encourage international trade (free international trade encourages economic growth because free trade extracts all the possible gains from specialization and exchange); 4) Improve the quality of education (education creates benefits beyond the ones enjoyed by the students who receive education).
Answer: Policies for increasing the economic growth rate are 1) Stimulate saving (for instance, tax incentives could be directed at increasing saving which will then increase the capital stock); 2) Stimulate research and development (inventions can be copied, so government subsidies can lead to more inventions that spread throughout the economy); 3) Encourage international trade (free international trade encourages economic growth because free trade extracts all the possible gains from specialization and exchange); 4) Improve the quality of education (education creates benefits beyond the ones enjoyed by the students who receive education).
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