Answer to Question #220743 in Macroeconomics for Bohlale

Question

Evaluate whether or not this policy approach is effective in real
life in achieving the desired level of GDP.

Answer 1

When the economy is at full employment, firms find it more difficult to hire people. As a result, competent workers may demand higher pay and benefits, which companies are more prepared to provide. Individually, this can be advantageous, but in the long run, it can be harmful to the economy.