Answer to Question #241251 in Macroeconomics for Koko

Question

Explain several significant points that can be raised about economic goals in terms of definition, complementarity, tradeoffs, and priorities.

Answer 1

Economic goal- the most important macroeconomic goal include: employment, economic growth and stability.

Complementary of economic goals

Achievement of one economic objective will help in achieving another one. Full employment needs employment of more resources including labour. Achieving price stability gives confidence to investors who increase prices spending leading to economic growth. Sustainable economic grow will entail allocation of more resources and more people will spend in the economy thus increasing their confidence.

Trade offs

Achievement of one goal hinders achievement of another. Full employment stability when economy expands unemployment declines and full employment is attained but inflation emerges. Efficiency and equity for example opportunity for ethnic minorities can enable distribution of wealth but efficiency is prevented since some employed workers are less skilled. Economic growth and full employment. Technological innovation can lead to high rates of economic growth but on the other side throw out people who lack skills needed for the new technology.

Priorities

Pursuing of one course means you consider another. Reducing unemployment may lead to inflation. Maximizing economic growth may conflict with protecting the environment. Cutting tax for the wealthy may require cutting welfare and affects the poor.