Macro Economic Objectives

When you study macroeconomics, you will study how the economy as a whole operates. It differs from
microeconomics, where the focus is on individual economic actors, consumers, and producers, including
their economic decisions.

Governments are trying to achieve several economic goals through their economic policies: demand-
side, and supply-side policies. It is not just about maximizing national income through high economic
growth. The most important macroeconomic goals involve how to achieve:

High and sustainable economic growth

Price stability
Full employment
Balance of payments equilibrium
Fair income distribution

The macroeconomic goals above are difficult to achieve simultaneously. Often, choosing one goal comes
at the expense of the other. For example, controlling inflation may require the economy to dampen
aggregate demand, which means high unemployment and low economic growth.

Full employment

Full employment is when the economy uses its productive resources, including labor. That doesn’t mean
everyone is working. Instead, those who are able and want to have a job can get one.In full
employment, the unemployment rate does not equal zero percent due to structural and frictional
problems. Some people are unemployed because they do not have sufficient skills as the market
demands.Also, some people have not found a job even though they have been actively looking for work.
They may be in the process of looking for job vacancies or following a company recruitment process. As
long as they are not working, we will consider them unemployed.

1. Define micro economy by providing an example.

2. Define macro economy by providing an example.
3. Explain in brief how governments try to achieve economic objectives by providing examples
from the case.
4. Name the main 5 macro economic objectives mentioned in the case study.
5. According to the case study how can full employment helps economic growth?