Objectives of Macro Economics

Economic Growth
Economic Stability
Economic Justice
Full Employment
Price Stability
External Equilibrium
 Economic Growth (EG)

Basic objective of any economy

Measures by the rate of growth of national
income (NI)and specifically the rate of growth in
per capita income
It includes concept like reduction in inequalities,
increase in std of living, overall economic
progress along with increase in per capita
income
Conditions necessary for EG includes
1. Availability of natural resources
2. Capital
3. Qualified labour
4. High level of capital investment
5. Technology
6. Efficient use of resources
7. Controlled growth of population
Instruments like monetary & fiscal policy aim at
bringing rapid and balanced economic growth
 Economic Stability (ES)
It is of 2 kinds
1. Domestic or internal stability
2. External stability which refers to foreign sector
Normally any economy faces fluctuations in
I. Level of output
II. General price level
III. Income level
IV. Balance of payment
V. Exchange rate
Business cycles often destabilizes any economy and maintaining
stable EG becomes the crucial objective of macro economic policy
 Economic Justice (EJ)
Its objective is reducing inequalities in distribution of income
and wealth in the economy
Economic Injustices arises due to
1. Inequality of opportunity to earn money income
2. Uneven distribution of income
3. Poverty & unemployment
4. Economic discrimination
5. Economic exploitation
6. Concentration of economic power and wealth
7. Prevalence of monopolies
Policies like fiscal, monetary, pricing and
income, government aims to reduce economic
inequalities and brings EJ.
 Full Employment
It means absence of unemployment
This objective is consistent with objective of EG,
and increase in level of output leads to increase
in level of employment.
With many macro economic instruments
government tries to create more employment
 Price Stability (PS)
Price fluctuations have adverse effects on
production, consumption and distribution.
Increase in price level is referred as inflation and
decrease in price level is referred as deflation-
both are unhealthy for the progress of any
economy. Inflation leads to reduction in
purchasing power of money resulting in falling
income (real). Deflation creates recessionary and
depressionary situation which harms the EG
 External Equilibrium
Also called Balance of payment equilibrium
Most difficult to maintain
Most tricky to understand and study
India's external transactions amounts to less than
10% of National Income
Our exports give less revenue than imports