Question

Explain how strong enforcement of carefully designed patent laws affects the growth rate of an economy. (5 points) Explain how tax incentives can be used to promote faster economic growth. (5 points) Explain the "infant industry argument" and its relationship to a country’s growth rate. (5 points) Explain what incentives can be used to increase the savings rate in an economy (as another way to promote faster economic growth). (5 points)

Answer 1

1.In simple words, strong enforced patent laws will work as a motivation to innovation and innovation always results in better outcomes for thee economy as the output in the economy could be increased dramatically through technology advances.

2. By simply decreasing the tax rates on income from middle class households, Government can increase the demand of goods due to higher income in hand which further results in growth of economy.

3. Such argument states the new industries must be protected from foreign competitors until they are stable on their own. This is completely true as new industrious lead to better employment opportunities which further leads to economic growth.

4. For first tax rates can be decreased for more income in hand and also interest rates on savings could be increased.