Objectives Of Macroeconomic Policy

According to the BBC, unemployment rates are at their lowest since the beginning of the recession in 2008.However how would such feat influence the economy in the long run and what other issues it may have caused, as far as the other three macroeconomic policies are concerned, is the real question. In order to answer such question with as much detail as it is required for one to understand how the economy is affected, it is required to elaborate on what each macroeconomic policy contains and how it is related to the other three macroeconomic policies. The four objectives of the macroeconomic policy are high and stable economic growth, low unemployment, low inflation and the avoidance of balance of payments deficits and excessive exchange rates

In order to accomplish this, it is crucial for a stable growth to be maintained, which therefore does not encourage short-term economic growth that cannot be sustained. As far as unemployment is concerned, its reduction is another major macroeconomic objective, as the unemployment benefits are draining the government revenues, but also represents a waste of human resources. (Sloman, Wride, 2009: 388) Another issue that affects the macro economy is inflation. This term signifies the rise in prices throughout the economy. The inflation rate is the measure of the annualized percentage change in a general price index, over time.( Mankiw 2002: 22–32) A high inflation rate will influence negatively the process of economic decision making and will result in businesses being more hesitant when it comes to investment decisions and wage/price rates. Last but not least, is the balance of payments and the exchange rate and the primary goal of the government is to avoid