TWO OF THE MACROECONOMIC GOALS ARE ECONOMIC STABILITY AND INCREASES IN THE STANDARDS OF LIVING.HOW CAN THE GOVERNMENT HELP TO PROMOTE BOTH OF THESEGOALS? PLEASE WRITE EACH ANSWER TO EACH GOAL IN A...

TWO OF THE MACROECONOMIC GOALS ARE ECONOMIC STABILITY AND INCREASES IN THE STANDARDS OF LIVING.HOW CAN THE GOVERNMENT HELP TO PROMOTE BOTH OF THESE

GOALS? PLEASE WRITE EACH ANSWER TO EACH GOAL IN A SEPERATE PARAGRAPH.

Expert Answers
pohnpei397 eNotes educator| Certified Educator

I'm not convinced that these two are mutually exclusive, but assuming that they are different:

To promote economic stability, the government would want to make business conditions very predictable.  Therefore, they might want to pursue a monetary policy like the one Milton Friedman wanted -- small increases in the money supply each year with everyone knowing what the the increase would be.  The government should also be very slow to change tax laws and other regulation -- you want firms to know exactly what is going to happen so they can plan.  This would bring stability.

To promote increases in standard of living, you want economic growth.  Many economists would argue that the way to do that is to increase aggregate supply.  This would be done by lowering taxes and by reducing the amount of regulation of businesses.  You could also provide subsidies for important products, though most economists prefer to stay away from these.  At any rate, this would be a more aggressive policy that would likely lead to growth, if not to stability.