Discuss‘looserfiscalpolicy’and‘supply-sidereforms’ that may be used by governments of Eurozone countries to increase economic growth.

Should always have A data point from the extract for each point making... (in this case the Data is not available) and you should take your points from the extract given.Firstly looser fiscal policy: fiscal policy is a policy the government uses where it adjusts either government spending or taxation level. For looser fiscal policy it would either increase government spending or decrease taxation. Economic growth is AD = C+ I+ G+ (X-M) so this policy would increase G from increase government spending and increase C and I from reduced taxation that would increase economic growth (ST).Supply side reforms: This policy is used to increase long term growth and increase the potential output of the economy at its natural rate (LRAS). Policy examples could include increasing education spending e.g STEM subjects being made compulsory at GSCE/A- Level. This would increase skills of the workforce and therefore productivity and economic growth. This however is only increased in the long run as it takes time for these skills to feed into the work force and therefore impact of productivity and economic growth. (LT)

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Answered by Alexandra B. Economics tutor

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