Question

What is that the government can do to boost the economy in relation to employment, inflation, economics growth, balance of payment and income distribution.

Considering five microeconomics objectives and fully explain each objective

Answer 1

Ans.

Goverment has a different policies that goverment can use whenever they like .Goverment can adjust its spending to influence economic condition.

Increase Tax rate :

To control inflation govt can use fiscal policy and increase the taxes , Monetary policy can be use by increasing interest rate.Main objective is to take  out money from the hand of people so that they does not demand more .once demand will decrease inflation or high price will also decrease.

Increase goverment spending:

Goverment can use these increasd taxes on building infrastructure ,highways that will increase employement and spend more money on those projects that increase emoloyement .when employement will increase people have money in their hand , they will generate demand in the economy.

Balance of payment :

Balance of payment is about sum of balance of trade Net earning from export minus the payment of  import.

Balance of payment can be achieved by expanding exports and decreasing imports.if thier is trade deficit.By introducing exchange policies ,By decreasing import in the country .

Income distribution :

Income distribution is distribution of income among more smoothly and equally among all citizen .It can be achieved by increasing employement ,By taxing high income group more and lower income group less,By subsidising lower income groups income can redistributed from rich to poor.

Ans: Five microeconomic objective :

Microeconomic objectives are closely related to economic growth major goal of microeconomics are :efficiency,equity and growth.

1.understanding consumer behaviour :

To interact in market it is necessary to understand the consumer behaviour .what consumer prefer to buy,understanding stragies employed by people while buying product.

2.understanding producer:producer strategies formation can be understood while what to produce ,when to produce .stratgey formulation while understanding external environment or analysing threats and opportunities available in the market.

3.supply amd demand :Analyse supply and demand .consumer determine the demand in the market where as producer follows it to supply .whereas producer can affect the demand by increasing or decreasing the demand.

4.underatand rational behaviour of consumer.consumer wants to maximise its profit by increasing his utility.consumer wants to spend less and want to acquire maximum satisfaction.

5.prodcuer and customer both has objective to maximise thier  financial investment .consumer wants to buy less expensive that still fullfill thier demand so that they can save real money and purchaisng power can increase.producer wants to maximise his profit by selling producer want to produce goods at least cost and want to sell it on maximum price so that they can increase thier profit.