If the political leaders of a country want to promote economic growth, which of the following policy alternatives would be most effective?
A) Imposition of price controls on agricultural products in an effort to keep food cheap.
B) A public-sector investment program financed by highly progressive taxation.
C) Low taxes, a monetary policy consistent with long-run price stability, and the abolition of price controls and trade restrictions.
D) Expansionary monetary policy designed to keep interest rates low.

Question

Quizplus · Accepted Answer

Low taxes, a monetary policy consistent with long-run price stability, and the abolition of price controls and trade restrictions would be most effective in promoting economic growth. This is because low taxes would incentivize businesses to invest and create jobs, while a monetary policy consistent with long-run price stability would promote macroeconomic stability and encourage investment. The abolition of price controls and trade restrictions would allow for greater competition, which would drive innovation and productivity, further boosting economic growth.

If the Political Leaders of a Country Want to Promote