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Why is macroeconomic stability for a country important?

Economics

Why is macroeconomic stability for a country important?

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Macroeconomic stability shields the country against the adverse effects of vagaries of the global market. Although it is an insufficient measure, it safeguards the economy against unexpected shocks as a way of supporting the process of growth. Fluctuations in the global market endanger the well-being of an economy. They can lead to the downfall of the GDP and lead to unexpected economic problems. Some of the most significant shocks include:

  • Currency fluctuations. Instability and unpredictability of currency strength adversely affect the monetary policies of a country. Macroeconomic stability protects the economy from such effects.
  • Unsustainable inflation. Every country needs to minimize its vulnerability to the impact of high levels of inflation in the global market to shield itself from harmful exposure.
  • Large debt burdens. Although the global market offers opportunities for countries, it is also risky in that it can also lead to a large national debt. Macroeconomic stability serves to protect the country from the possible rise of such liabilities.

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