2.7 What are the macroeconomic objectives of governments? Do they conflict?

Wednesday, May 22, 2013

What students need to learn:

Students should be able to:
Additional Guidance Notes
Current macroeconomic objectives
Identify, outline and evaluate the major current macroeconomic objectives.
Objectives may include increased economic growth; control of inflation; a reduction in unemployment; restoration of equilibrium in the Balance of Payments; making the distribution of income more equal; and protection of the environment.
Conflicts between objectives
Consider basic conflicts between objectives, such as inflation and unemployment; or economic growth and sustainability.
Possible trade offs include those between inflation and unemployment; growth and
sustainability; inflation and equilibrium on the current account of the Balance of

Students should understand the short run Phillips curve, but the long run and expectations augmentation are not required.
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