trade offs

• what are the main macro objectives?

  Strong Econ growth,

  keeping inflation low,

  reduce unemployment,

  maintaining equilibrium in the B.O.P
• what are other objectives?

  more equal distribution of income and wealth,

  protecting the environment,

  maintaining economic stability,

  improving productivity and international competitiveness
• why are there conflicts between policy objectives?

  trying to achieve one objective makes it more difficult to achieve another
• what happens in the short run by the govt?

  govt decides the objectives they think are most important and accept these decisions have an adverse effect on other objectives

  e.g trade offs between their objectives
• how can the govt use short-term policies to correct sudden problems?

  major unemployment caused by severe recession- govt accepts that inflation results from policies designed to reduce unemployment quickly to get people back to work