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Unformatted text preview: & Macroeconomics Lecture 4 Conflict in Macroeconomic Objectives Economists evaluate the success of an economy's overall performance by how well it attains these objectives: 1. high levels and rapid growth of output and consumption [output is usually measured by the gross domestic product (GDP), which is the total value of all final goods and services produced in a given year; also, GDP should be close to potential GDP, the maximum sustainable or high-employment level of output]. 2. low unemployment rate and high employment 3. price-level stability (or low inflation) 4. Balance of Payment Performance (exports greater than imports). The first and main objective of a country is to increase GDP or achieve economic growth as it is the key for achieving the other objectives. Without growth peoples' standard of living will not increase, thus no job opportunities are created, no ability to export and if inflation is too high then the value of money falls negating any increase in living standards. However, it is not always the case that the country can achieve the 4 goals together specially that any country faces two main conflicts while achieving the goal: First Conflict: In developing countries developing countries face a difficulty to increase GDP and at the same time decrease the BOP deficit:...
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- Spring '11