macroeconomic policy

macroeconomic policy

the setting of broad objectives by the government for the economy as a whole and the use of policy instruments to achieve those objectives. Macroeconomic objectives include FULL EMPLOYMENT, the avoidance of INFLATION, ECONOMIC GROWTH and BALANCEOF-PAYMENTS EQUILIBRIUM. FISCAL POLICY, MONETARY POLICY and SUPPLY-SIDE POLICIES are the main policy instruments used to regulate the economy.

Generally, the achievement of a broad objective, such as avoiding inflation, involves the setting of‘intermediate targets’, like, for example, the permissible rate of growth of the MONEY SUPPLY. See alsoDEMAND MANAGEMENT, PRICES AND INCOMES POLICY, INTERNAL-EXTERNAL BALANCE MODEL, FIXED TARGETS, OPTIMIZING, BUSINESS CYCLE, EQUILIBRIUM LEVEL OF NATIONAL INCOME, DEFLATIONARY GAP, INFLATIONARY GAP, MEDIUM-TERM FINANCIAL STRATEGY, ECONOMIC POLICY, MICROECONOMIC POLICY, NEW AND OLD PARADIGM ECONOMICS.

Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005