Conflicting Goals In Economic Growth

Below is a free term papers summary of the paper "Conflicting Goals In Economic Growth." If you sign up, you can be reading the rest of this term papers in under two minutes. Registered users should login to view this term paper.

Term Paper Title	Conflicting Goals In Economic Growth
# of Words	866
# of Pages (250 words per page double spaced)	3.46

Conflicting Goals in Economic Growth

Conflicting Goals in Economic Growth

        Goals of monetary policy are to "promote maximum employment, inflation
(stabilizing prices), and economic growth." If economists believe it's possible
to achieve all the goals at once, the goals are inconsistent. There are
limitations to monetary policy.

        The term "maximum employment" means that we should try to hold the
unemployment rate as low as possible without pushing it below what economists
call the natural rate or the full- employment rate. Pushing unemployment below
that level would cause inflation to rise and thereby ruin the other objective--
stable prices, economic growth, which is our objectives in the long run.

        Overall financial stability will lead to a better balance between
consumption and saving that will make resources available for investment
purposes, reduce changes in the economy created by the inflation in the past,
and by the reactions of savers, as well as fostering high and sustainable
economic growth; and contribute towards an investor friendly environment that
will attract foreign investors to the country.

        Evidence has suggested that economies perform better, in terms of growth,
employment and living standards, in low inflation environments than they do when
inflation is persistently high. This evidence is a comparison  across countries
over long periods. The association between economic performance, measured by
growth of output or growth of productivity, and inflation. This indicates a
negative relation; that is, the higher the inflation, the lower the rate of real
growth.

        Evidence suggesting that low inflation promotes growth has motivated
recent decisions by a number of central banks and governments, most notably New
Zealand. Canada, the United Kingdom and Sweden also have moved in recent years
to establish monetary policy with official low inflation targets. Decisions to
adopt a policy objective of low inflation suggest that other policy-makers are
reading the evidence pertaining to inflation and growth as we are.

        Consistent attempts to expand the economy beyond its potential for
production will result in higher and higher inflation, while ultimately failing
to produce lower average unemployment. Therefore, most economists would argue
that there are no long-term gains from consistently pursuing expansionary
policies.

        Monetary policy can determine the economy's average rate of inflation in
t...

This is not the end of the termpaper! Register below to see the complete version of this term paper.

Membership Plans	Credit Card	Check

1 month membership

3 month membership (You Save 50%)

6 month membership (You Save 67%)

Copyright © 2002-2007 Mid Term Papers. All rights reserved. This term papers website is used for research purposes only.
If you have forgotten your username or password, please click here.
If you like to cancel your account, please click here.

1 - 2 - 3 - 4 - 5 - 6 - 7 - 8 - 9 - 10 - 11 - 12 - 13 - 14 - 15 - 16 - 17 - 18 - 19 - 20 - 21 - 22