The Management Of The Macroeconomy - 1594 Words

Does it matter if the management of the macroeconomy is driven by political as well as economic considerations?/ careful thought The management of the macroeconomy is crucial for a countries stable economic growth. In this essay we will evaluate the effects of following economic as well as political considerations and determine whether a particular drive is beneficial or detrimental to a countries macroeconomy. Initially when referring to the macroeconomy we focuses on the aggregate changes in the economy such as unemployment, growth rate, gross domestic product and inflation. As a result of economist John Maynard Keynes work in the 1930s, governments are able to control the total amount of demand in the economy /Aggregate Demand (AD =†¦show more content†¦In reducing unemployment rates policymakers are able to cut government spending on benefit tax and generate greater government expenditure through means of income tax, which can then be put back into the economy to stimulate growth. For example greater expenditure can be used settle the outstanding trade deficit or used on public goods such as healthcare to create a more productive workforce, which will in itself benefit the economy through a greater number of units being produced- Keynesian multiplier effect. Clearly we are able to see the many benefits of reducing unemployment for an economy, which will not only benefit consu mers as they posses greater income, but businesses also through greater sales margins. Inevitable greater income levels for the government will result in greater income levels for consumers and business also, leading to an increase in injection into the economy and thus aid to stimulate economic growth. As we can establish whether the consideration to reduce unemployment originate from a political or economic foundation it will lead to the positive management of the macroeconomy. However, how policymakers intend to reduce unemployment is key to the success of managing the macroeconomy. If policymakers interests are to stimulate economic growth they will intend to use long term monetary, fiscal and supply-side policies to create steady