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WalesEconomicsQuick questions
Economics in Action (AS Unit 2)
Quick questions on Macroeconomic objectives - WJEC A-Level Economics
3short Q&A pairs drawn directly from our worked dot-point answer. For full context and worked exam questions, read the parent dot-point page.
What are conflicts between the objectives?Show answer
The main conflicts are: growth versus inflation (boosting aggregate demand to raise growth near full capacity pushes the price level up); unemployment versus inflation (the short-run Phillips Curve says lower unemployment tends to come with higher inflation); and growth versus the balance of payments (higher incomes raise demand for imports, worsening the current account). Further tensions are growth versus the environment (output growth can raise emissions and resource use) and growth versus equity (the gains from growth may be unevenly shared). The escape route from several of these is supply-side improvement: raising potential output (shifting LRAS right) can deliver growth without inflation and improve competitiveness, easing the trade-offs, which is why supply-side policy is so prized.
What is q1?Show answer
Name the four main macroeconomic objectives. [2 marks]
What is q2?Show answer
Explain why pursuing faster economic growth might conflict with the inflation objective. [3 marks]
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