lesson 2- conflicts in macroeconomic objectives

Question 1

it is _____ for all economic _______ to be achieved at the same time

Answer 1

it is rare for all economic objectives to be achieved at the same time

Question 2

name + explain 5 conflicting objectives

Answer 2

growth (GDP) vs inflation
-as GDP grows, demand grows,prices rise
inflation vs unemployment
-phillips curve
unemployment vs balance of payments
-low unemployment means wages rise,so more money is spent on imports
Balance of payments vs inflation
-inflation rises,UK looks less appealing as an exporter, so reduces exports

Question 3

further reading- Ireland
How rich was Ireland when it joined the EU?
what did they invest in?

Answer 3

-began as being one of the poorest countries in the EU
-invested in education and using grants to attract foreign businesses to invest there

Question 4

what is Phillips curve?

Answer 4

As unemployment rises, inflation shrinks
-because more people are unemployed, so wages drop due to higher demand and availability of jobs, so costs lessen
-if less people are unemployed,workers have more power, so wages rise due to competitiveness, so costs rise

Question 5

further reading- Czech republic
How rich?
what did they transition to?
positives + negatives

Answer 5

started as relatively poor
-tried to transition to democracy and a free market economy
-focused trading on wealthier west Europe
-negatives- firms shut down due to imports becoming preferred, and reduce in production needs