Three Major Macroeconomic Goals Essay

1662 Words Jul 21st, 2013 7 Pages
Assignment 2
The three major macroeconomic goals of an economy should be economic growth, low unemployment/full employment, and low inflation rates. Economic growth occurs when an economy ‘increases its ability to produce goods and services’ (AmosWeb, 2012). The growth or loss of the economy is measured by the production of goods made in a year compared to the production of goods made in the previous year. If there is a greater production of goods and services in the present year, then there has been a growth in the economy. Low unemployment/full employment is when goods and services are produced through all resources. These resources primarily include labor, capital, land, and entrepreneurship. Lastly, low inflation rates are potential
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For Canada, according to a recent article from the Toronto Star, full employment was halted after the recent recession in 2008-09. Canada had an unemployment rate of less than 6% (full employment, fewer than 6% unemployment rate equals to full employment). But this increased after the recession, but Canada has recovered fast from the recession, though it is yet to reach full employment again. According to the article, it will take approximately 4 more years for Canada to reach that point, and in those 4 years the country may face the opposite of the benefits of full employment, ‘both households and governments rein in spending, leading to slower overall economic growth…’ (Flavelle, 2012). Low unemployment rates/Full employment can help economies in a number of ways; governments should really exercise the option of hiring more workers and take advantages of the various benefits.

Lastly, low inflation rates along with economic growth and low unemployment rates add in to the equation that results into a healthy economy. Compared to the other major goals, lowering inflation rates also has its share of benefits for the economy. According to the Bank of Canada, Low inflation rates help the purchasing power of money to stay consistent, allowing ‘consumers and businesses to make better long-range plans…’ (Bank of Canada, 2009). This is a good thing for small businesses especially; this increases their

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