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What are the government economic objectives

Updated: Feb 22, 2022

There are four (4) government economic objectives

The government aims to achieve;

  1. A low inflation rate

  2. Low unemployment rate

  3. Economic growth

  4. A balance in internation trade (balance of payment)

Low inflation rate

A government would want to ensure that the economy have a low inflation rate to ensure that price of goods are affordable to meet the needs and wants of the population.

Low unemployment rate

A low unemployment rate also means high employment rate, reducing poverty while saving government on welfare and unemployment benefits. Income earned from employment will ensure that there is constant demand for goods and services that will encourage more production and business activity, ensuring economic growth.

Economic growth

As the economy grow, jobs will be created, providing employment and income to the population. This will improve the living standard of the population as demand for goods and services increase, enabling firms to profit. This would provide a steady tax revenue for the government.

Balance of trade

International trade enables globalization, which helps create jobs from foreign investment. Export enables products to be sold abroad, increasing inflow of income and foreign reserves (currency), while imports enable businesses to obtain goods, equipment and technology not available in the country or cheaper abroad.

They are achieved using government policy instruments such as public expenditure, taxes and interest rates


  1. Economic growth

  2. Inflation

  3. Import & Export

  4. Employment


  1. What is meant by ‘Gross Domestic Product’? (2 marks) May/June 2019/12

  2. Identify two possible effects on businesses from falling Gross Domestic Product. (2 marks) May/June 2019/12

  3. Identify two economic objectives of country X’s government. (2 marks) Oct/Nov 2019/12

  4. Do you think that all businesses will benefit from operating in a country which is experiencing rapid economic growth? Justify your answer. (6 marks) May/June 2020/12

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