2.2 Economic Policy Objectives

• Economic policy objectives are the goals that governments set to guide their economic strategies
• Match the economic policy objective with its description:

  Economic Growth ↔️ Increasing the production of goods and services

  Price Stability ↔️ Keeping inflation around 2%

  Full Employment ↔️ Minimizing unemployment

  Balance of Payments Equilibrium ↔️ Balancing exports and imports
• Balance of payments equilibrium maintains financial stability and international relations.


  True
• Price stability ensures that the purchasing power of money is preserved.

  True
• Match the economic policy objective with its benefits:

  Economic Growth ↔️ Higher living standards

  Price Stability ↔️ Stable investment climate

  Full Employment ↔️ Increased economic output

  Balance of Payments Equilibrium ↔️ Improved international competitiveness
• Full employment reduces poverty and increases overall economic welfare
• Economic growth can sometimes conflict with environmental sustainability.


  True
• Order the steps to resolve conflicts between economic policy objectives:

  1️⃣ Identify potential conflicts

  2️⃣ Analyze the trade-offs

  3️⃣ Prioritize policy goals

  4️⃣ Implement balanced strategies
• Why is preserving purchasing power important in price stability?

  Maintains investment confidence
• Match the economic policy objective with its description:

  Economic Growth ↔️ Increasing the production of goods and services

  Price Stability ↔️ Keeping inflation around 2%

  Full Employment ↔️ Minimizing unemployment

  Balance of Payments Equilibrium ↔️ Balancing exports and imports
• Economic growth is achieved by increasing the production of goods and services over time.


  True
• Balance of payments equilibrium avoids trade deficits or surpluses
• Balance of payments equilibrium ensures stable exchange rates
• Economic growth often increases consumption and pollution
• Lowering taxes can stimulate consumer spending and investment.


  True
• Order the policy instruments from most targeted to least targeted:

  1️⃣ Monetary Policy

  2️⃣ Fiscal Policy

  3️⃣ Regulatory Policies
• Price stability aims to keep inflation around 2%.


  True
• Full employment minimizes unemployment and increases economic output
• What is the role of economic growth in improving living standards?

  Creates jobs and wealth
• Why is balance of payments equilibrium important for international relations?

  Maintains financial stability
• Price stability ensures a stable investment climate.


  True
• What is one potential conflict between inflation and unemployment?

  Reducing unemployment may increase inflation
• Achieving sustainable development may require slowing down economic growth
• Economic growth raises living standards by creating wealth and jobs.


  True
• What does balance of payments equilibrium prevent in international trade?

  Trade deficits or surpluses
• What are the main economic policy objectives governments aim to achieve?

  Economic growth, price stability, full employment, balance of payments equilibrium
• What does full employment aim to minimize?

  Unemployment
• Full employment reduces poverty and increases economic output.

  True
• Reducing unemployment may lead to higher inflation.


  True
• Match the economic policy instrument with its primary objective:

  Fiscal Policy ↔️ Economic Growth

  Monetary Policy ↔️ Price Stability

  Regulatory Policies ↔️ Environmental Sustainability
• Regulatory policies can address issues like environmental sustainability and financial stability
• What is the importance of economic growth as an economic policy objective?

  Raises living standards
• Why is price stability important for an economy?

  Preserves investment confidence
• Order the main economic policy objectives based on their significance:

  1️⃣ Economic Growth

  2️⃣ Price Stability

  3️⃣ Full Employment

  4️⃣ Balance of Payments Equilibrium
• Full employment reduces poverty and increases individual welfare
• What is one benefit of economic growth for a country?

  Increased job opportunities
• How does balance of payments equilibrium improve international competitiveness?

  Maintains stable exchange rates
• What is one trade-off between inflation and unemployment that policymakers must consider?

  Balancing fiscal and monetary policies
• What is the target inflation rate set by many governments for price stability?

  Around 2%
• Full employment ensures that labor resources are fully utilized