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How does the government achieve the main 5 macroeconomics objectives?

Economics Dec 15, 2020

How does the government achieve the main 5 macroeconomics objectives?

Expert Solution

Objective of macroeconomics

1) Non-inflationary growth:- The objective of the central bank is to achieve economic growth without inflation. There are stable policy and sustainable goal over the long run that results in the outward shift of the production possibility curve.

2) Low inflation:- To control inflation, the central bank reduces the money supply such that LM curve shifts leftward which increases the rate of interest in such a manner that the private investment reduces that causes the aggregate demand curve shifts leftward which reduces both price level and output in an economy.

3) Equilibrium in the balance of payment:- It means that a country exports or import should be equal such that the trade balance deficit or trade surplus is not good for the economy.

4) The fair distribution between rich and poor:- It means the difference between rich and poor people should not be large that means for the fair for one person and may not be fair for others person that means all wealth should not be distributed to the small group of person.

5) Low unemployment:- The objective is to employ more and more person who wants to be employed so the economy can reach toward the full capacity.

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