What will help the economy?

Answer 1

As a general problem, there are always at least a few ways to improve economic growth and production:

1) Increase the level of economic inputs, such as labour, capital, natural resources, and human capital. These inputs will strictly increase production.

2) Increase the utilisation rate of economic inputs. This means 'get more from less' by better exploiting existing resources for more output. This includes minimising frictional unemployment, among other things.

3) Increase the interdependent marginal productivities of inputs. This allows existing and future inputs to produce more with fewer inputs of other types (e.g.) machines which require less human operation).

4) Achieve the optimal saving-consumption ratio, also known as the golden rule level of investment. Optimal savings-consumption maximises future economic growth by allocating current resources to the future or borrowing future resources for the present.

5) Increase the level of technology. Technology can be represented in many different ways, but it generally encompasses not only 2&3 but also society's ability to use and acceptance of new advances.

6) Set inflation to match economic growth. Inflation has costs, commonly referred to as shoeleather, menu, and redistribution, that are inefficient. The effort spent to adjust to inflation could be used to stimulate demand and supply.