Gordon Rule macroeconomic We have been studying macroeconomic policy objectives.

Question

Gordon Rule macroeconomic

We have been studying macroeconomic policy objectives. The attainment of a macroeconomic policy objectives, including price stability, high employment, present problems, such as low inflation in the face of high unemployment, and trade-offs, such as less unemployment at the cost of high inflation. Identify the current greatest obstacles-social, physical, technical, or a combination of these-and the solutions needed for the adoption of the proposed macroeconomic policy objective (300-500 words)

Explanation / Answer

The main macro-economic policy objectives are to maintain the

As our macroeconomic goals are not typically confined to “full employment”, “price stability”, “rapid growth”, “BOP equilibrium and stability in foreign exchange rate”, so our macroeconomic policy instruments include monetary policy, fiscal policy, income policy in a narrow sense. But, in a broader sense, these instruments should include policies relating to labor, tariff, agriculture, anti-monopoly and other relevant ones that influence the macroeconomic goals of a country. Confining our attention in a restricted way we intend to consider two types of policy instruments the two “giants of the industry” monetary (credit) policy and fiscal (budgetary) policy. These two policies are employed toward altering aggregate demand so as to bring about a change in aggregate output (GNP/GDP) and prices, wages and interest rates, etc., throughout the economy.

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