Conflicts in Achieving the Macroeconomic Objectives
- As the UK government tries to implement one objective, in the short run it can affect its ability to achieve another objective
The Common Trade-offs that Exist Between the Macroeconomic Objectives
Conflict |
Explanation |
Economic growth and inflation |
|
Economic growth and environmental sustainability |
|
Economic growth & inequality |
|
Economic growth and a balanced budget |
|
Economic growth and balancing the current account |
|
Low unemployment and low inflation |
|
Exam Tip
The material on this page is frequently examined in the Paper 2 structured questions. You will be asked to discuss to what extent rapid economic growth might conflict with at least two other macroeconomic objectives.
- Identify two other macroeconomic objectives that are in conflict with economic growth, such as low levels of inflation and environmental sustainability
- Explain that if UK government tries to achieve one's objective, it affects the ability to achieve another macroeconomic objective
- Consider that low and stable rates of inflation may have been sacrificed in order to achieve economic growth. Additionally, economic growth contributes to environmental degradation and sustainable development.