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Chapter 1: Q 14. (page 25)

What are the three main goals of macroeconomics?

Short Answer

Expert verified

The three main goals of macroeconomics are:

  1. Low Inflation
  2. Low Unemployment
  3. Growth in the Standard of Living

Step by step solution

01

Step 1. Defining Macroeconomics

Macroeconomics remains the department of economics that deals with the economy as a whole. It concentrates on overall problems such as unemployment, inflation, and development.

02

Step 2. Concept of Low inflation 

The first main goal of macroeconomics is Low Inflation.

Inflation stands for the increase in the normal price level. Macroeconomics desires to regulate the rate of inflation.

03

Concept of Low Unemployment 

The second main goal of macroeconomics is low Unemployment

Unemployment stands in a condition when an individual is seeking a job but cannot discover a paid job. Macroeconomics analyses elements that will improve the rate of occupation in the economy.

04

Concept of the Growth of Standard of Living 

The second main goal of macroeconomics is the growth of Standard of Living

The economic development of the nation is defined by the average living of that country. Macroeconomics examines the elements that influence the standard of living and concentrates on enhancing it.

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Most popular questions from this chapter

The main reason that some nations have higher average living standards than others is that

A. the richer nations have exploited the poorer ones.

B. the central banks of some nations have created more money.

C. some nations have stronger laws protecting worker rights.

D. some nations have higher levels of productivity.

International trade benefits a nation when

  1. Its revenue from selling abroad exceeds its outlays from buying abroad.
  2. Its trading partners experience reduced economic well-being.
  3. All nations are specializing in producing what they do best.
  4. No domestic jobs are lost because of trade.

Adam Smith鈥檚 鈥渋nvisible hand鈥� refers to:

  1. The subtle and often hidden methods that businesses use to profit at customers鈥� expense.
  2. The ability of free markets to reach desirable outcomes, despite the self-interest of market participants.
  3. The ability of government regulation to benefit consumers even if the consumers are unaware of the regulations.
  4. The way in which producers or consumers in unregulated markets expose costs on innocent bystanders.

Why is productivity important?

Suppose America decide to save more of their incomes. If banks lend this extra saving to business that use the funds to build new factories, how might this lead to faster growth in productivity? Who do you suppose benefits from higher productivity? Is society getting a free lunch?
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