Trade offs between Macroeconomic Objectives

These flashcards cover key concepts related to conflicts between macro

What happens to prices as economic growth increases near full employment?

Prices for remaining resources are bid up, leading to inflation.

How does economic growth typically affect pollution and resource depletion?

Economic growth often increases pollution and depletes non-renewable resources.

What is a consequence of high economic growth on income disparity?

During high economic growth, profits for owners of production factors increase disproportionately to workers' wages, leading to greater inequality.

What is an effect of expansionary fiscal policy on the budget during economic growth?

It often requires a budget deficit.

How does economic growth impact the current account balance?

Economic growth usually leads to higher incomes, which increases imports and worsens the current account balance.

What is the relationship between low unemployment and inflation?

Closer to full employment leads to wage inflation, which increases overall inflation.