The Business Cycle and Macroeconomic Objectives Term Paper

The Business roulette wheel and Macroeconomic Objectives - Term Paper ExampleRecognition of the relationship of withdrawals and injections has also been made which allows better overview of the markets. The relationship of withdrawal and injections has shown an indirect link similar to the savings and investments, taxation and government expenditures. The last and most essentials particle of this paper is the discussion of the circular flow of income and the four macroeconomic objectives i.e. a) Economic Growth, b) Reduced Unemployment, c) Rise of Inflation, and d) constipation of Balance of Payments. The formula below provides a view on the relationship of the four main objectives of macroeconomics. The figure shows how in a short term the four objectives, i.e. faster growth of output, lower unemployment, lower puffiness and the avoidance of balance of payments deficits are related to each other (Sloman and Sutcliffe). The relationship depends on the aggregate enquire which is i nfluenced by each phase of the business. a)Expansionary Phase In this phase (phase 2), the aggregate demand grows very speedily and the gap between the potential output and actual output is relatively narrower. Here the growth in the output will be relatively rapid and the levels of unemployment will be faced with a bemuse as well. This provides a solution for two issues however it leads to the other two sectors to be faced with issues (Sloman and Sutcliffe). With the high levels of shortages the inflation is also affected and this leads to the deteriorating balance of payments which in turn leads to the domestic goods being less free-enterprise(a) in the international markets. b)Peak At phase three of the cycle i.e. the peak phase, the level of unemployment is at the lowest and the output of the company is at the highest level.