The Impact of the Central Bank and Long run Economic Growth on the Economy

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2. The Central Bank cannot be solely responsible for stabilizing the economy. Who else is responsible and what role do they play?
The central bank doesn’t control the economy; there are others that have an effect on the economy. These include, the government, stock markets, commercial & retail banks, businesses, and the EU.
Government
Along sides the central bank the next key player in molding the economy is the government. The government influences the economy in everything they do. A government’s main aims for an economy are:
• Economic Growth, and
• Economic Stability

Employment
The government employs millions of people. For example the UK government employs NHS workers, Police, Civil Servants, HM Revenue and customs, border patrol, etc.

If the UK government decided to cut its workforce by 50% the UK would face mass unemployment, and there would be millions of people possibly on job seekers, whilst looking for a new job.

However if the government decided to increase its workforce by 50% this would possibly end unemployment, however there would also be a surplus of jobs, workers wages would go up, along with prices of goods, and taxes; as there are too many jobs, and companies would be desperate to employ people. The government employs the amount of people it can afford whilst having the best affect on the economy with regards to employment levels and aggregate demand (total demand for goods and services in the economy).

The government can also influence employment of business by offering schemes and bonuses. For example the apprentice scheme is driven to raise employment of youngsters by businesses, which is made more attractive to the businesses by having a lower minimum wage, and in return the apprentices gain a qualifi...

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...n response the policy makers in Kenya introduced a number of supply and demand side policies. Among many include demand side access to imports, supply side subsidies for fertilizer and seed, supply side export ban on maze.

These supply and demand side policies were designed to stabilize the economy, for example by banning export on maze the demand went down, meaning so did the price for the population of Kenya.

Conclusion
We can see that long run economic growth is fundamental for the economy and the future of the economy is uninviting without it. LREG improves the living standards of a country, as seen with the example in Kenya where supply side policies allowed for greater access to food, it can also lead to increased expenditure and a higher GDP, for example by increasing employment rates by providing capital for companies to hire and purchase new technology.

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