Answer to Question #84498 in Macroeconomics for Iqmal

Question

a) Discuss the three big macroeconomics questions.


b) Explain the objectives of macroeconomic policy.

Answer 1

a) The three big macroeconomics questions are:

- WHAT to produce: society cannot have everything its people want.

- HOW to produce: see which method is lower in cost so that the items are less expensive, which could be more affordable.

- FOR WHOM to produce: society must decide who will receive the things produced.

b) The objectives of macroeconomic policy are:

(i) Full employment,

(ii) Price stability,

(iii) Economic growth,

(iv) Balance of payments equilibrium and exchange rate stability, and

(v) Social objectives.