Objectives,Circular flow and GDP and GNI

Question 1

What is economic growth?What is the objective?

Answer 1

Increase in the real gdp of an economy over a given period of time. Positive stable and sustainable rate of growth.Rate of growth is a major indicator of economic performance.

Question 2

Inflation?Objective?

Answer 2

Sustained increase in the price level of an economy over a given period of time.Low stable rate of inflation.

Question 3

Unemployment?Objective?

Answer 3

Unemployment are when workers are out of paid work but are willing and able to work and are seeking work.Low rate and level of unemployment coupled with high rate and level of employment.Level and rate of employment are indicators of economic performance.

Question 4

BoP?Objective?

Answer 4

Records all economic transactions between domestic consumers in an economy and the rest of the world.Current account records all income flows between an economy and the rest of the world.Long term stability in the current account.Major indicator

Question 5

Economic stability definiton?

Answer 5

Avoidance of significant fluctuations in economic activity to promote sustainable economic growth.

Question 6

Conflicting objectives?

Answer 6

High rate of employment Vs low rate of inflation
Economic growth vs Position in BOP
Economic growth Vs equitable distribution of income
Higher living standards in short run vs higher living standards in long run