5.7 Public Policy and Economic Growth

a. Explain (using graphs as appropriate) public policies aimed at influencing long-run economic growth. b. Define supply-side fiscal policies.

• [For a description of economic growth and information about how to show it graphically, see LO MEA-2.B, LO MOD-1.B, and LO MOD-2.I] Public policies that impact productivity and labor force participation affect real GDP per capita and economic growth.
• Government policies that invest in infrastructure and technology affect growth.
• Supply-side fiscal policies affect aggregate demand, aggregate supply, and potential output in the short run and long run by influencing incentives that affect household and business economic behavior.
• Enduring understanding POL-4: Authorities and organizations institute policies that affect economic growth.