Macroeconomic Goals

Q. Describe Macroeconomic Goals

Three conditions of the mixed economy that are most important for macroeconomics, including full employment, stability, and economic growth, that are generally desired by society and pursued by governments through economic policies.

Macroeconomic goals are three of the five economic goals of a mixed economy that are most important to the study of macroeconomics. They are full employment, stability, and economic growth.

Full Employment: Full employment is achieved when all available resources (labour, capital, land, and entrepreneurship) are used to produce goods and services. This goal is commonly indicated by the employment of labour resources (measured by the unemployment rate). However, all resources in the economy--labour, capital, land, and entrepreneurship--are important to this goal. The economy benefits from full employment because resources produce the goods that satisfy the wants and needs that lessens the scarcity problem. If the resources are not employed, then they are not producing and satisfaction is not achieved.

Stability: Stability is achieved by avoiding or limiting fluctuations in production, employment, and prices. Stability seeks to avoid the recessionary declines and inflationary expansions of business cycles. This goal is indicated by month-to-month and year-to-year changes in various economic measures, such as the inflation rate, the unemployment rate, and the growth rate of production. If these remain unchanged, then stability is at hand. Maintaining stability is beneficial because it means uncertainty and disruptions in the economy are avoided. It means consumers and businesses can safely pursue long-term consumption and production plans. Policies makers are usually most concerned with price stability and the inflation rate.

Economic Growth: Economic growth is achieved by increasing the economy's ability to produce goods and services. This goal is best indicated by measuring the growth rate of production. If the economy produces more goods this year than last, then it is growing. Economic growth is also indicated by increases in the quantities of the resources--labour, capital, land, and entrepreneurship--used to produce goods. With economic growth, society gets more goods that can be used to satisfy more wants and needs--people are better off; living standards rise; and scarcity is less of a problem.