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Chapter 10: Macroeconomic Policy (page 196)

What are the main macroeconomic objectives of a government?

Short Answer

Expert verified

Economic Growth, Low inflation, low unemployment, price stability and sustainable balance of payments.

Step by step solution

01

Macroeconomic objectives

  • attain high levels of economic growth, maximize the standards of living within the country and improve the economic welfare of the country.
  • maintain low levels of unemployment and full employment levels.
  • Achieve price stability with the means of limiting and controlling inflation
  • Maintain a satisfactory balance of payments to avoid exchange rate problems in the long term.

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Most popular questions from this chapter

True or False. Larger MPCs imply larger multipliers.

Why will a reduction in the real interest rate increase investment spending, other things equal?

If the MPS rises, then the MPC will

  1. fall.

  2. rise.

  3. stay the same.

Why is investment spending unstable?

Refer to the table in Figure 10.5 and suppose that the real interest rate is 6 percent. Next, assume that some factor changes such that the expected rate of return declines by 2 percentage points at each prospective level of investment. Assuming no change in the real interest rate, by how much and in what direction will investment change? Which of the following might cause this change: (a) a decision to increase inventories; (b) an increase in excess production capacity?
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