Government Macroeconomic Policy Objectives (Copy)

10.1 Government Macroeconomic Policy Objectives

Objective	Definition	Target / Aim	Policy Considerations
Inflation	Sustained rise in general price level.	Low, stable inflation (e.g., 2% in many economies).	High inflation erodes purchasing power; deflation discourages spending.
Balance of Payments (BOP)	Record of all economic transactions with rest of world.	Current account stability (avoid large deficit/surplus).	Persistent deficits may weaken currency; surpluses can cause trade tensions.
Unemployment	People willing and able to work cannot find jobs.	Low unemployment near natural rate (full employment).	Too low → inflation risk; too high → lost output & welfare.
Economic Growth	Increase in real GDP over time.	Steady, sustainable growth close to potential.	High growth boosts living standards but can cause inflation.
Economic Development	Improvement in living standards, poverty reduction, education, healthcare.	Inclusive, broad-based improvements in quality of life.	Growth without development can widen inequality.
Sustainability	Meeting present needs without harming future generations’ ability to meet theirs.	Balance economic, social, and environmental goals.	Requires green policies and resource conservation.
Redistribution of Income and Wealth	Reducing excessive inequality through tax/benefit systems.	Greater equity without harming efficiency.	Too much redistribution may weaken incentives; too little can cause social unrest.