List and describe briefly the economic policy objectives of

List and describe briefly the economic policy objectives of the nation

Solution

Soluton :

The most basic and fundamental economic policy objectives of the nation are

1) To achieve faster economic growth : Every country will attempt to accelerate its economic growth. Economic growth refers to the steady process of increasing the productive capacity of the economy , hence increasing the national income. Every nation prefers faster economic growth because of the underlying assumption that , the greater the growth rates of the nation , greater the material well being of the population . Faster economic growth will also mean more employment and a better standard of living for the people.

2) Reduction in inequalities of income & wealth : -

Inequality of income and wealth arises mainly due to the differences in ownership of property , mostly inherited , and to a lesser degree the result of differences in earned income. Inequalities of income has been reduced much by 1) steeply progressive death duties imposed on inherited wealth , 2) steeply progressive income tax from employment and still heavier tax on unearned income. Also the government adopts redistibutive policy where the poor receive many benefits from public authorities such as subsidized food, and essential commodities from the public distribution system, scholarships , quotas and subsidies , old-age pensions and unemployment insurance & so on.

3) Full employment : - Performance of any government is judged in terms of achieveing full employment i.e modern governments aim at reducing umemployment rates .

Unemployment refers to involutary idleness of labor force and other productive resources . Unemloyment of labor is closely related to the economy\'s agrregate output . Higher the unemployment rate , greater the divergence between actual aggregate output and potential output. So one of the objectives of economic policy is to ensure full employment .

4) Price stability :

Sustained increase in price level as well as falling price level produce destabilising effects on the economy . Therefore , one of the objectives of economic policy is to ensure ( relative) price level stability. This goal prevents not only economic fluctuations but also helps in the attainment of a steady growth of an economy .

5) Balance of payments equilibrium : -

Persistent balance of payments disequilibrium - whether surplus or deficit tends to have adverse economic consequences , there exists a need for adjustment by the intervention of economic policies of the government. Thus the government through its economic policies such as adjustments in interest rates , money supply can correct the Persistent balance of payments disequilibrium.