Two macroeconomic objectives are maintaining the level of economic growth and level of unemployment Identify key...

Two macroeconomic objectives are maintaining the level of economic growth and level of unemployment

Identify key problems which may be encountered when the government attempting to balance the level of unemployment and maintain the level of economic growth objectives
Evaluate the macroeconomic measures, employing fiscal and/or monetary policies, which could be taken to balance these two objectives.

Expert Solution

Balancing act if unemployment vis-a-vis economic growth is catch 22 situation as for example when unemployment goes low in US in 2019 the economic growth bounced back causing inflation to go high as side effects as seen in Phillips curve phenomenon.

Now due to Coronavirus in 2020, the unemployment has reached higher nd economic growth has come down massively which means even inflation is low to all time lowest levels after 2008 crisis.

In such situation, government and central bank adopt an expansionary fiscal policy and expansionary monetary policy by which unemployment reduces, aggregate consumption rises and aggregate demand too causing GDP and Inflation to rise.

However government creates higher supply of food products bringing down Inflation as aide effects.

Rahul Sunny answered 6 months ago

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