Final answer:
The government of a free-market economy can stimulate economic growth by implementing policies such as subsidies and incentives. These policies provide financial support and motivation to businesses and individuals, leading to increased investment, production, and job opportunities.
Step-by-step explanation:
The government of a free-market economy can implement various policies to stimulate economic growth. One of these policies is providing subsidies and incentives to businesses and individuals. Subsidies are financial assistance given by the government to certain industries or sectors to encourage growth and development. Incentives, on the other hand, can include tax breaks, grants, or other benefits that motivate businesses and individuals to invest and expand their activities.
For example, the government may offer a subsidy to a renewable energy company to encourage the production and use of clean energy. This subsidy can help the company lower its costs and become more competitive, which in turn stimulates economic growth in the renewable energy sector.
These policies can be effective in promoting economic growth as they provide support and encouragement to key industries and individuals, leading to increased investment, production, and job opportunities.