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Macroeconomic Objectives Essay

explanatory Essay
1754 words
1754 words
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The economy tend to move from boom to recession, it is difficult for government to maintain and achieve macroeconomics objectives. At this time, there are “conflicts between government macroeconomic objectives”, which is this extended essay main theme. This essay will look at the government macroeconomic objectives, the conflicts between macroeconomics objectives, the best policy or mixture of policies to minimize the conflicts between macroeconomics objectives and recommendations, which are classified as main objectives and additional objectives.
Macroeconomics is the study of the economy as a whole, which looks at economic growth, unemployment and inflation. (Dobson and Palfreman, 1999) Government macroeconomics objectives can dividend into …show more content…

In this essay, the author

  • Explains that the economy tends to move from boom to recession, and it is difficult for government to maintain and achieve macroeconomic objectives.
  • Explains that macroeconomics is the study of the economy as a whole, which looks at economic growth, unemployment, and inflation.
  • Explains the four main objectives of macroeconomic policy: long-term growth of the economy, low and stable inflation, a low level of unemployment rate, and balance the current account.
  • Explains the four objectives of government macroeconomics objectives: raise standard of living, protect the environment, improve productivity, and ensure sound government finances.
  • Explains that it is difficult for government to achieve all the macroeconomics objectives at the same time. a policy irritating aggregate demand may reduce unemployment in the short term but launch a period of higher inflation
  • Explains that a health economic growth and low rate of inflation are important to achieve.
  • Explains that in a growing economy, consumers spend more on foreign goods than domestic goods, which leads to deteriorating trade deficit and disequilibrium in the balance of payments.
  • Opines that a health economic growth and equal distribution of income and wealth is one of the conflicts between macroeconomic objectives.
  • Opines that healthy economic growth and a good environment require infrastructure, which may construct roads, public transport, airports, etc. there are also costs associated with growth.
  • Explains the trade-off between a low rate of inflation and low unemployment.
  • Explains that a balance in the current account may lead to high inflation, which will reduce the competitiveness of the economy.
  • Describes the benefits of higher employment and a good and sustainable environment.
  • Explains that government cannot achieve all these main and additional objectives at the same time. fiscal policy, monetary policy and supply-side policy solve the conflicts between macroeconomic objectives.
  • Explains that the government's fiscal stance indicates whether it is trying to expand the economy that is to increase employment or to reduce the likely level of inflation.
  • Explains that government can influence the economy by using monetary policy to control inflation and unemployment. if there is a rise in interest rates, it reduces inflationary pressure, but it leads to lower growth in output.
  • Explains supply-side policy, which aims at improving the efficient supply of goods and services. it can effect on the rate of economic growth, inflation, unemployment and current account.
  • Opines that supply-side policy minimizes the conflicts between economic growth and low inflation by allowing a higher level of aggregate demand, but will not affect the general price level.
  • Explains that fiscal and monetary policies can help to minimize the conflicts between low unemployment and low inflation. fiscal policy has its initial impact in the goods markets, then
  • Explains that in every economy, there are 4 main and 4 additional objectives of government macroeconomics objectives. they point out that the objectives have their own conflicts which difficult to carry out at the same time.
  • Opines that government should consider the importance of the government macroeconomic objectives goals and which governments should priority first. this will be an easier way for government to allocate resources.

A rise in standard of living can lead to a fall in relative poverty. For example, reducing child poverty and pensioner poverty. Protect the environment means care for the environment from misuse and overuse. Government also wants to improve their productivity which improve their own competitiveness and global trade performance. More or enough government spending could appropriately compensate for private consumer and capital spending. Therefore, there are four main objectives and four additional objectives of government macroeconomics objectives.
It is difficult for government to achieve all the macroeconomics objectives at the same time. Conflicts between macroeconomics objectives means a policy irritating aggregate demand may reduce unemployment in the short term but launch a period of higher inflation and exacerbate the current account of the balance of payments which can also dividend into main objectives and additional objectives (N. T. Macdonald, …show more content…

These two policies use to try to shorten recessions. Fiscal policy has its initial impact in the goods markets, then monetary policy has its initial impact mainly in the assets markets, which both effect on both level of output and interest rates. (R. Dornbusch et al., 2008)
In every economy, there are 4 main and 4 additional objectives of government macroeconomics objectives. We can point out that the objectives have their own conflicts which difficult to carry it out at the same time between government macroeconomic objectives. Therefore, government use different policies to minimize the conflict.
In my opinion, the most important aspect is that government should consider the importance of the government macroeconomic objectives goals and which government should priority first. This will be an easier way for government to allocate the resources and help to focus the government macroeconomic objectives

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