(a) How might the government attempt to increase the underlying rate of economic growth of the UK economy"

There are many policies available to the government which are likely to increase the underlying rate of growth in the UK economy. Economic growth is defined as the rate of growth of national income in the long run, measured in real terms, and the UK's current trend rate at 2.5%. The government can adopt policies to adjust economic growth in both the short and the long run.

The cause of short term economic growth is an increase in aggregate demand, therefore an increase in any of its components will lead to the rate accelerating. The government could implement polices to alter consumption, investment, government spending or exports, which will change the demand-led growth by shifting the AD curve to the right.

The most obvious policy available to a government to increase...