Question

The main goal of macroeconomic policy is to:

A. Expand the trade surplus.
B. Move the economy toward potential GDP.
C. Balance the federal budget.
D. Continue to increase GDP growth.

Answer 1

The principal aim of macroeconomic policy is to steer the economy towards its potential GDP, focusing on economic growth, full employment, and price stability through monetary and fiscal policy tools. The main goal of macroeconomic policy is to b. move the economy toward potential GDP.

Step-by-step explanation:

This involves pursuing key objectives like economic growth, low unemployment, and low inflation. Government macroeconomic policy uses tools like monetary policy, conducted by the central bank, and fiscal policy, determined by the legislative body, to work towards these goals. Monetary policy includes managing bank lending and interest rates, while fiscal policy encompasses government spending and taxation. Stability in prices, the attainment of full employment, and fostering economic growth are pivotal to maintaining a strong economy.