Conflicts and trade-offs between objectives

Discuss the view that high levels of employment are always beneficial for an economy.

Evaluate how, in the long-run, governments could try to reconcile conflicts between the various objectives of economic policy.

Extract E (lines 15–17) states: ‘Policies were put in place to reduce the money supply and reduce government spending. The control of inflation became the main target of UK government macroeconomic policy.’

Using the data in the extracts and your knowledge of economics, evaluate the view that achieving a low and stable rate of inflation should be the main economic objective of governments.

Which one of the following changes in macroeconomic performance is most likely to involve a trade-off, at least in the short-run, between the objectives of government

Evaluate the view that the main objectives of UK government macroeconomic policy can be achieved without conflicting with each other.

The diagram below shows the aggregate demand (AD) curve, the short-run aggregate supply (SRAS) curve and the long-run aggregate supply (LRAS) curve for an economy. The economy’s initial equilibrium is at E₁.

The government wants to achieve economic growth without conflicting with its long-run objective of price stability. All other things being equal, which one of the following policy combinations is most likely to enable the economy to achieve a new long-run equilibrium

Discuss the view that falling unemployment will inevitably lead to trade-offs with other macroeconomic policy objectives.