Potential policy conflicts and trade offs

Question 1

What are the 4 main government objectives?

Answer 1

1. economic growth
2. low inflation
3. low unemployment
4. acceptable position on the balance of payments

Question 2

What policy conflicts with low inflation?

Answer 2

High unemployment

Question 3

Describe the Phillips curve and how it is labelled?

Answer 3

Curve from the top left to bottom right

Left side is labelled Inflation rate
Right side is labelled Unemployment rate %

Question 4

What is the Trade off off economic growth?

Answer 4

Negative externalities- such as inflation or pollution. This conflict is between enjoying a resource today and future generations enjoying it.