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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

Adam Smith’s “invisible hand” refers to:

  1. The subtle and often hidden methods that businesses use to profit at customers’ 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.

In what ways is your standard of living different from that of your parents and grandparents when they were your age? Why have these changes occurred?

The company that you manage has invested \(5 million in developing a new product, but the development is not quite finished. At a recent meeting, your salespeople report that the introduction of competing products has reduced the expected sales of your new product to \)3 million. If it would cost $1 million to finish development and make the product, should you go ahead and do so? What is the most that you should pay to complete development?

Macroeconomics is an aggregate of what happens

at the microeconomic level. Would it be possible for

what happens at the macro level to differ from how

economic agents would react to some stimulus at the

micro level? Hint: Think about the behavior of crowds.

Explain whether each of the following government activities is motivated by concern about equality or a concern about efficiency. In the case of efficiency discuss the type of market failure involved.

  1. Regulating cable TV prices
  2. Providing some poor people with vouchers that can be used to buy food
  3. Prohibiting smoking in public places
  4. Breaking up standard oil (which once owned 90 percent of all U.S. oil refineries) into several smaller companies
  5. Imposing higher personal income tax rate on people with higher incomes.
  6. Enacting laws against driving while intoxicated
See all solutions

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