ABSTRACT
This chapter deals with the potential growth rate and its determinants. It explains the adjustments required if any new rate of economic expansion established through government policy is to become a sustainable one, particularly the adjustments required in the oligopolistic sector's savings curve. Ever since Keynes identified the potential growth rate with the 'full employment' level of income, manpower has been seen as the limiting factor in economic expansion. The efficacy of monetary policy will depend on the effect which a change in either interest rates or the money supply is likely to have on the willingness of decision-making units within the oligopolistic, non-oligopolistic, government and household sectors to incur further debt. Efforts to control the price level in the oligopolistic sector by reducing the rate of economic expansion will not only be ineffectual, they may even, because of the effect on output per worker and the realized corporate levy, actually boost the rate of inflation.
