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MACROECONOMIC OBJECTIVES FROM CONVENTIONAL PERSPECTIVE - Coggle Diagram
MACROECONOMIC OBJECTIVES FROM CONVENTIONAL PERSPECTIVE
TO ACHIEVE PRICE STABILITY
Economists are interested in what is happening to the prices of goods and services. .
want to know what is happening to inflation
when prices remain largely stable, and there is not rapid inflation or deflation..
Price stability is not necessarily the same as zero inflation, but instead steady levels of low-moderate inflation is often regarded as ideal
TO ACHIEVE EQUILIBRIUM IN THE FOREIGN SECTOR
Means economic transaction or activities that take place beyond the political boundaries
such as imports and exlports, investment
balance of payment(BOP) that indicates greater inflow that outflow of money
if country faces BOP deficit its means that the country will have to borrow from other countries
BOP surplus will lead to inflation
TO ACHIEVE ECONOMIC GROWTH
determined to establish a country's total production of goods and services. (GDP)
n other words, this is stable and sustainable economic growth and development that is “real” (non-inflationary) over the long-term.
Another way to define growth is the increase in a country’s total output or Gross Domestic Product (GDP).
Economic growth in an economy is an outward shift in its Production Possibility Curve (PPC).
The objective of the central bank and government would be an increase in economic growth without a rise in the rate of inflation.
TO ACHIEVE FULL EMPLOYMENT
full employment refer to 100% of the labour force being employed
the potential benefits of full employment in economy are that available resources can be optimized efficiectly
Refer to level of employment rate where there is no existence of cyclical or involuntary unemployment
more resources are employed more output can be produced because higher output produced can translate into improved economic growth
TO ACHIEVE AN EQUITABLE DISTRIBUTION OF INCOME
The government doesn’t want all the wealth concentrated with a small group of people.
A fair or equitable distribution of income means that the gap between the rich and the poor is not too large.
Fair or equitable doesn’t mean equal, but fair is a relative concept.
What could be fair to one person, may not be fair to another.