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  Macroeconomic Policy, Growth Policy and Stabilization Policy

Macroeconomic Policy:

Growth Policy:

Not anything matters more in long run for quality of life in an economy than its long-run rate of economic progress. Argentina versus Sweden in economic progress in the 20th century. In 1929, e.g. Argentina was at number fifth in the world for automobiles per capital. But until now Argentina is classified as a "developing" country. Why? Destructive economic guidelines have retarded economic progress.

Stabilization Policy:

The second main stream of macroeconomic policy is government's stabilization policy. Business cycles. The times in which the production grows and unemployment drops are termed as booms, or macroeconomic expansions. The times in which production drops and unemployment increases are known as recessions, or worse, depressions. Booms are welcomed; recessions are feared.

Today's governments have commanding abilities to improve economic progress and to smooth out the commerce cycle by diminishing the depth of recessions and dejections. Good macroeconomic strategy can make roughly everyone's life better; bad macroeconomic strategy can make roughly everyone's life much poorer. E.g policy makers' dependence on the gold standard as the worldwide monetary system throughout the Great Depression was the basis of macroeconomic catastrophe and human depression. So the stakes that are at jeopardy in the study of macroeconomics are high.

In end of 1982 the U.S. macroeconomy was in the worst form ever since the Great Depression. The unemployment rate was more than 10%. In an average week in 1983, some 10.7 million Americans were jobless--actively seeking employment, but not able to find an employment which seemed worth taking. That year the average jobless American had already been jobless for more than twenty weeks. The average household earnings in the United States was eight percent below its long-run trend.

By dissimilarity, at the end of 2000 U.S. unemployment was only four percent, and standard household income was 4% above trend.

Bad macroeconomic strategy makes years such as 1982 and 1983 much more common than years like 1999 and 2000. Although good macroeconomic strategy can’t maintain the degree of relative prosperity which was seen in 2000 indefinitely, it can all however remove the prospect of years such as 1982 and 1983.

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