Economic
analysis is concerned with the means of achieving particular economic
objective. The choice of the objectives
[How people want economic resources to be used in order to satisfy their wants]
is a matter of political decision.
While government changes, there will be a difference in the emphasis, but there
is a broad general agreement on the main aims.
They
are,
1)
Full
employment,
2)
Price stability,
3)
Economic growth,
4)
Redistribution of
income and wealth,
5)
Balance of payments stability.
The
first task is to determine the objectives, then the target and then to choose
the instruments of policy. These instruments used are based upon some
available range of measures.
The
first aim is full employment, that
is, the extent to which there is full employment (of all the resources) in
a country. How the economy is utilizing all the resources at an optimum level.
The next is the importance of Labour –as a factor of production, the
policies regarding employment generation, and the methods to reduce
unemployment. A government will seek to achieve as low unemployment
as possible to ensure it is making best use of resources
The
second aim is price stability,
that is,
The
important aspect is that the degree at which a government achieve this in a
particular country. Price stability is an important aim of governments, as it
can create certainty and encourage investment
The
third aim is economic growth,
that is,
This
information enables to know about the growth of a country. How growth can be influenced by a
government. How a government could try
and increase the rate of economic growth. It helps to compare growth rates in
different countries- economic growth has the potential to raise living
standards. Study the related causes, benefits and costs of growth.
The
fourth aim is the redistribution of
income and wealth, that is,
The
information about the distribution of income in a country enables us to know
about whether the redistribution allows moving the income and wealth from the
rich to the poor which reduce poverty. Secondly, how the government is trying
and achieves a more equitable distribution of income. Finally it evaluates the
extent to which such policies have achieved a redistribution of income over a
period of time.
The
last aim is balance of payments
stability, that is,
The
information on the balance of payments of the concerned country’s performance
in international trade and it also enable to assess the extent to which there
has been stability over a period of time.
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