4.2.1.1 The objectives of government economic policy NOTES

What is one of the primary objectives of government macroeconomic policy?

• Decreasing consumer choice

• Increasing import tariffs

• Reducing technological innovation

• Promoting sustainable economic growth

What does price stability in macroeconomic policy refer to?

• Decreasing the national debt

• Rapid changes in monetary policy

• Keeping inflation at a low and stable rate

• High fluctuation in prices

Which policy tool is used by governments to control inflation?

• Expanding welfare programs

• Reducing exports

• Increasing unemployment

• Interest rate adjustments

What is the goal of minimizing unemployment in macroeconomic policy?

• To increase tax rates

• To reduce consumer spending

• To limit business investments

• To improve economic well-being and contribute to growth

What does a stable balance of payments on the current account aim to avoid?

• Reducing governmental transparency

• Excessive reliance on foreign borrowing

• Excessive reliance on domestic borrowing

• Increasing domestic investments

What does the Phillips curve illustrate?

• The impact of exports on domestic job creation

• The correlation between fiscal policies and economic growth

• The inverse relationship between inflation and unemployment

• The direct relationship between inflation and GDP

What conflict arises between economic growth and environmental sustainability?

• Improved waste management systems

• Increased pollution and resource depletion

• Enhanced renewable energy usage

• Decreased industrial activity

What can restrictive monetary policies lead to?

• Dampened economic growth

• Higher rates of employment

• Increased investment in technology

• Decreased borrowing costs

What is a challenge in balancing fiscal policy decisions?

• Ignoring infrastructure needs

• Focusing solely on short-term economic recovery

• Eliminating all forms of taxation

• Navigating trade-offs between economic stimulus and fiscal consolidation

What is required for effective policymaking in macroeconomic objectives?

• Careful consideration of trade-offs and a balanced approach

• Focusing only on immediate results

• Ignoring long-term objectives

• Prioritizing only one macroeconomic objective