Describe two benefits of economic growth.
Increase in people standard of living. As economic growth in the short run means increase in real GDP and so people’s real income will rise and they will be able to consume more goods.
Also economic growth can help in reducing unemployment, because with higher GDP tax revenue will increase and government will be able to spend more on building public goods in order to provide unemployed with workplaces.

Comment on the effectiveness of one supply side policy in promoting economic growth.
To promote economic growth government can increase labor’s productivity by using supply side policies such as education and training. Investment in human capital that is education, training that workers get, might help to increase productive capacity and stimulate economic growth. However the opportunity cost is very big and government could spend this money on other sectors. Also effect can be undesirable because productivity might not increase and this very often depends on personal abilities.

Discuss the benefits of a fall in the rate of inflation
Inflation is a sustainable rise in the price level. Low level of inflation is one of the main objectives of the macroeconomic performance of the country. Consumer’s real income, that is the income after adjusted for the inflation, will increase so they will be able to consume more. However benefits vary according to which type of inflation is low. Cost push inflation is more dangerous because it is more difficult to reduce it. And low cost push inflation means that producers can produce goods at lower costs and easier can increase supply. Low inflation rates means that people and businesses can make plans and forecast the future as they know that money will not lose their purchasing power very quickly. Firms can make predictions of their sales and this will be beneficial for their profits.
Low price level means can influence balance of payments and make exports more competitive. However, this depends on a relative inflation in other countries and even if in the country is inflation is low but in others it is lower, then goods within the country will be still uncompetitive.
Sometimes too low price levels may cuase a deflation and if this deflation is arising from fall in AD, suppliers will have to stop ptoducing so many goods and this might lead to a higher unemployment rate.