Question

In the long-run, the aim of the Australian government is not just to recover from the current recession and reduce the output gap to zero but also to increase the potential output of the economy. What economic policies do you advise to the Australian government to increase the potential output of the Australian economy in the long run. (250 words)

Answer 1

Ans:- Australia is a wealthy and underpopulated nation. Australia's economy depending greatly on agricultural and foreign investments. Improving or advancing productivity influvanced a nation's fundemental cause of long run increase in potential output and nation's standard of living. Many economic policies will helps Australia to increase the potential output in the long run. Policies for increasing quantities and qualities of factors of production help a lot, that factors of production included capital,land,labour and entrepreneurship etc. Policies for adujesting ,wages for a long run, policies like full employment output result economic development. Policies like multifactor production is another method for increasing potential output for a long run. Another policies such as growth or progress in the size of the working people allow a nation to increase it's potential output. This increase in workforce attained from natural growth , increasing birth than death rate, through immigration etc.