Government economic policy Essay Example | Topics and Well Written Essays - 2000 words

Government economic policy - Essay ExampleThis paper describes main economic objectives set by different governments all over the world and the its economic policies carried out by them to guide the providence towards achieving these objectives. The policies of governments can be referred to as macroeconomic policy maculation the policies of smaller entities like business organizations ar called micro economic policies. Both these sets of economic policies bring a dynamic relationship with each other and run into each other significantly.Both these sets of economic policies have a dynamic relationship with each other and affect each other significantly.There are four economic objectives that are espoused as standard. These are full usage or stated low unemployment stability of prices value of economic growth, determined by the government and the maintaining of the Balance of Payments in equilibrium. In its simplest form full employment measures those who are employed out of th ose who are employable.The attraction in full employment as an economic objective is the potential it provides to maximize production while leading to enhance standards of living. The reverse side of the coin is that it reduces economic and thereby mixer dysfunctions. Managing inflation to an acceptable level is the objective of price stability.In recent times there are other objectives that have been added on to the macro economy and they have to do with the management of the social and natural spheres through macroeconomic policy. One such an objective is ensuring a more equal distribution of riches in society and the second is the managing of the environment to ensure that economic activity does not adversely affect the environment ... It also makes sound decision reservation and allocation of resources more tedious. Inflation is measured as the annual rate of change of the Retail Price Index (RPI). When inflation is kept low prices live stable, which augurs well for all gove rnments. The next objective refers to economic growth. It is deemed as attractive when the rate is both high and can be sustained. The measure used is the rate of change of countries Gross Domestic Product. The effectuate of inflation has to be negated for it to be an acceptable measure therefore whats measured is real GDP, which is GDP with the effect of inflation negated. The final of the four traditional objectives is the maintenance of the balance of payments equilibrium. This could also be called maintenance of external stability, which in turn ensures confidence in the transnational markets of a countries economy. Managing the foreign debt of a country does this. In recent times there are other objectives that have been added on to the macro economy and they have to do with the management of the social and natural spheres through macro economic policy. One such objective is ensuring a more equal distribution of wealthiness in society and the second is the managing of the en vironment to endure that economic activity does not adversely affect the environment like the depletion of resources to levels where it cannot be replenished or pollution. stinting policy actions can vary from manipulation of interest rates by a central finance authority such as the Federal Reserve, regularisation the expenditure of governments, taxes as well as interventions such as property rights of private individuals. An example of such