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2281 · 4.1

The role of government

**The role of government** (4.1) frames the **macroeconomic aims** (4.2) and the policy tools that follow (4.3–4.5). In every answer, state which aim the policy serves before judging it.

Need to know

What you need to know

  • Macroeconomic objectives are the primary goals of government economic policy.
  • The four key objectives are: growth, employment, inflation, and balance of payments.
  • These goals are pursued to improve national living standards and economic welfare.
  • Objectives can be complementary (e.g., growth creating jobs) or conflicting (e.g., low unemployment vs. low inflation).

Explanation

The role of government

  1. Macroeconomic objectives are the primary goals of government economic policy.
  2. The four key objectives are: growth, employment, inflation, and balance of payments.
  3. These goals are pursued to improve national living standards and economic welfare.
  4. Objectives can be complementary (e.g., growth creating jobs) or conflicting (e.g., low unemployment vs. low inflation).
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