right so have you understood all the policies available to government and let's understand how the government can actually promote economic growth in the short run and in the long run remember there are two different types of growth if you don't understand that watch my video on causes of economic growth so the short run let's say they want to increase short-term growth that will increase growth immediately in which case what's needed is an increase in aggregate demand and that can occur from various sources maybe that could occur from expands very monetary or fiscal policy let's have some examples expansionary fiscal policy maybe an increase in government spending maybe a reduction in taxation a reduction income tax or actually corporation tax whatever it might be or maybe expense era monetary policy a reduction interest rates a reduction in the exchange rate and increase in the money supply all of which will increase aggregate demand measure of this diagram and you can see when I recommend shifts action growth increases from y1 to y2 that's the intention an increase in actual short-term economic growth another benefit of these policies is as we've learnt already there can be a dual effect an aggregate supply as well so that's an extra benefit that we might see at the same time but there are some problems you can see on this diagram that there is some demand pull inflation from p1 to p2 as a result of a great demand increasing and there is no guarantee that these policies were actually work they depend on lots of different factors so whether growth increases depends on the initial level of economic activity I've drawn my 81 where there is quite a bit of spare capacity in the economy if there wasn't much effect a city an increased federal demand might not increase economic growth because we don't have enough facts to production available in the economy to actually produce more so it depends on the initial level of economic activity the more spec asking the greater chance of respect event will increase growth depends on receiver confidence at that slow growth will increase as expected so anytime we talk about consumption increasing if that's what's underpinning your ad shift well then you can always bring in the consumer confidence argument depends on the size of the multiplier the bigger the multiplier the less that dispenser and the expansion airy policy needs to actually be implemented so the less that government spending needs to increase the lesser taxation needs before etc and also depends on the length of time back so soon evaluation points there for a long run growth were looking at supply side policies a whole host of which you can find in my video on supply-side policies so any surprises are policies that will shift long-run aggregate supply to the right and you can see on this diagram that happening as a result there is an increase in potential growth yes but the way I've drawn magnet demand there is also an increase in actual birth from y1 to y2 so that's going to do it but that's going to be a long term policy a long run effect another benefit often surplus that policy start without a government spending or reduce taxation in which case there will be an increased negative demand at the same time so benefits again dual effects but a long time a long long time to work there's no guarantee that they will work they're very costly they carry large opportunity cost and whether they work on on stimulating growth depends on the initial level of economic activity go in this case the more spec uppity the more an increase in aggregate demand is needed not an increased macro supply so if my ad was way down here I drew it on my ad was way down there that increasing longer name and supply does not change the level of growth the level of growth is still going to be down here so for these policies to work we need to be quite closed or full employment that without put so short-run growth policies demand side policy expansion spending fiscal policies whereas more aware than the supply side policies both of which of all their problems that's policies to rely on growth thanks very much see you next time