4.15. Policies towards Developing Economies; Policies of Trade and Aid

Question 1

Government Macro Policy AIms

Answer 1

• Sustainable economic growth
• Low rates of inflation
• Low unemployment
• Economic development
• Balance of payments stability
• Exchange rate stability
• Fairer distribution of income and wealth
• Balanced government budget
• Minimise environmental impacts

Question 2

Low inflation aim conflicts

Answer 2

• Rising unemployment.
• Slower economic growth.
• Appreciation of currency

Question 3

Balanced budget aim conflicts

Answer 3

• Slower economic growth.

- Rising unemployment

Question 4

Economic growth & Low unemployment aim conflicts

Answer 4

• Higher inflation rates.
• Current account (BoP) deficit.
• Rising inequality.
• Worsening of government budget.
• Environmental damage