Which Macro-Economic Objectives is the most important and why?
Which Macro-Economic Objectives is the most important and why? (14)
There are many different objectives within Macro-Economics however the most important are between Inflation, Unemployment, Balance of Payments and Economics Growth. Personally I believe inflation is the most important.
So why do I believe Inflation is the most important. Well, firstly Low inflation is a main macro economics goal for western countries. This is because of the many factors of inflation. One for example is that a higher inflation rate will make goods less competitive leading to a fall in exports. This will eventually lead to a decline in the exchange rate. Therefore inflation should be kept at a minimum as it can cause a decline in competitiveness. High inflation also leads to governments to being unacceptable which leads to them to increase interest rates to reduce spending and investment. This reduction however will lead to a decline in economic growth and unemployment .Another factor would be if inflation was unanticipated and sudden rather than an inflation that was anticipated then this would impact the people and firms negatively and will increase costs. Inflation will make borrowers have the advantage whereas lenders with a disadvantage. This is because inflation reduces the value of savings however it depends on the interest rate. If the interest rate is higher than the inflation rate then the person will not lose their money. All in all inflation should be kept in a minimum. If not then inflation will cause a huge amount of problems for the country, The UK for example have an inflation rate of 2.8%, however they have the target of 2%. This is overall good compared to Zimbabwe which had a hyper-inflation. This is why inflation is also an important factor of Macro-Economics.
I believe Economics Growth has important factors to lead to become an good Macro-Economics Factor. Macro Economics is important because it increases the standard of living. By having a higher GDP, more
There are many different objectives within Macro-Economics however the most important are between Inflation, Unemployment, Balance of Payments and Economics Growth. Personally I believe inflation is the most important.
So why do I believe Inflation is the most important. Well, firstly Low inflation is a main macro economics goal for western countries. This is because of the many factors of inflation. One for example is that a higher inflation rate will make goods less competitive leading to a fall in exports. This will eventually lead to a decline in the exchange rate. Therefore inflation should be kept at a minimum as it can cause a decline in competitiveness. High inflation also leads to governments to being unacceptable which leads to them to increase interest rates to reduce spending and investment. This reduction however will lead to a decline in economic growth and unemployment .Another factor would be if inflation was unanticipated and sudden rather than an inflation that was anticipated then this would impact the people and firms negatively and will increase costs. Inflation will make borrowers have the advantage whereas lenders with a disadvantage. This is because inflation reduces the value of savings however it depends on the interest rate. If the interest rate is higher than the inflation rate then the person will not lose their money. All in all inflation should be kept in a minimum. If not then inflation will cause a huge amount of problems for the country, The UK for example have an inflation rate of 2.8%, however they have the target of 2%. This is overall good compared to Zimbabwe which had a hyper-inflation. This is why inflation is also an important factor of Macro-Economics.
I believe Economics Growth has important factors to lead to become an good Macro-Economics Factor. Macro Economics is important because it increases the standard of living. By having a higher GDP, more