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The Keynesian theory states that private sector decisions sometimes lead to inefficient macroeconomic outcomes and thus focuses more on the public sector for policy making. Monetary theorists are more inclined towards money and economies. Some of the approaches that can be used by these theorists to promote long run macroeconomic growth are as follows: Introduction of the stimulus package: Here governments try to stabilize the economy by controlling money supply and interest rates Use of budget surplus: This policy is used in times of high inflation to stabilize prices. Control of government expenditure and taxes: This will stimulate the economy in the long run nope Persistent budget deficits create a heavy strain on the trade deficit, as the government finds it hard to pay for its imports. When national savings are present to improve the trade deficit, the policy makers can use the savings to pay for its imports and other deficit. Savings imply investment, which in turn lead to economic growth and income in the long run. Supply side economics argues that economic growth can be created by lowering production barriers and increasing investment. The major way through which they deal with deficit is by lowering marginal tax rates and decreasing regulation.
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