Macroeconomic aims of a government

This is sometimes known as the great moderation. Macroeconomics also studies trade among different countries. In order to ensure social justice, policymakers use macroeconomic policy instruments.

Governments have virtually no means of repaying debt other than through future taxation. However, it depends on how you reduce a budget deficit.

The Goals of Economic Policy

It explains the factors which determine the level of national income and employment in as economic. This condition is called inflation. In a stagnant economy, unemployment is high, productivity is low, and jobs are hard to find. That is why every country aims at building substantial volume of foreign exchange reserves.

There are at times,difficulty in the measurement of aggregates. Aggregate supply is perfectly elastic if the economy has a significant number of unemployed resources, as then more can be produced without a contingent rise in costs of production and prices.

This is characterised by the right of taking economic decisions by any individual rich or poor, high caste or low caste. Government debt can become problematic through both a crowding-out effect and through the deadweight loss of future taxation.

5 Main Aims of Government for Economy Development – Discussed

Theses resources have their effect on the national income, employment, effective demand, aggregate saving, aggregate investment, price level, economic development etc. However, it is difficult again to define the permissible or reasonable rate of inflation.

Is the effect of government regulations on auto emissions microeconomics or macroeconomics? Some of the prices paid by people are lower than those appearing in the official price level indices, as people buy some products at reduced prices in sales and also make second hand purchases.

Anyway, the accumulation of foreign exchange reserves is largely conditioned by the exchange rate the rate at which one currency is exchanged for another currency to carry out international transactions. Taxes fund government operations that range from the provision of collective services military and police services, courts, roads, etc.

Even a president whose party controls both houses of Congress finds it difficult to get everything the executive branch wants. Full employment, thus, does not mean that nobody is unemployed. Firms will not raise their prices because they expect their costs to be higher, households will not bring forward purchases for fear that items will be more expensive in the future and workers will not press for wage increases just to maintain their real disposable income.

Of course, not everyone wants to work or is able to work. This goal prevents not only economic fluctuations but also helps in the attainment of a steady growth of an economy.

In view of this conflict, it is said that macroeconomic policy should promote economic growth with reasonable price stability. Ultimately, policymakers and bureaucrats are blamed as troubleshooters.

Performance of the economy, however, is influenced not just by government policies. By price stability we must not mean an unchanging price level over time. But macro-economics has following limitations.Aug 22,  · what does the government want to achieve through its macroeconomic policies?

What Are the Five Major Economic Goals?

government policy has been reduced to a cautious effort not to make things worse B in effect a macroeconomic goals for the twenty-first century are very different from those which confronted “Macroeconomic Policy and Sustainability. Macroeconomics: Government - Expenditures, Taxes and Debt.

By Stephen D. Simpson, CFA. fiscal policy is the use of taxation and government spending for the purposes of macroeconomic goals. The five major economic goals are full employment, economic growth, efficiency, stability and equity, and they are divided into both macroeconomic and microeconomic goals.

What is macroeconomics?

On the macroeconomics spectrum, policies are made to reach economic growth, stability and full employment. For microeconomics. The main government aims for the economy are full employment, price stability, economic growth, redistribution of income and stability of balance of payments.

A government can operate a range of policy measures to achieve these aims and it is judged on their success or otherwise.


Macroeconomic deals with the functioning of the economy as the whole. It is concerned with economy wide issues such as unemployment, inflation, and economics growth/developmen t; it is the study.

Macroeconomic objectives and conflicts Download
Macroeconomic aims of a government
Rated 4/5 based on 12 review