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O Levels Economics (2281)•2281/12/O/N/20
Question 16 from 2281/12/O/N/20

Explanation

Government's Macroeconomic Objectives

Steps:

  • Identify core aims of economic management: growth, stability, employment, and sustainable balance.
  • Evaluate options against standard goals like increasing output and controlling inflation.
  • Eliminate unrealistic or secondary aims, such as absolute equality or environmental focus.
  • Confirm the option aligning with production growth and price stability.

Why A is correct:

  • Governments pursue economic growth (increase in production, measured by GDP) and price stability (preventing high inflation, per macroeconomic policy definitions like those in Keynesian economics).

Why the others are wrong:

  • B: Zero unemployment is impossible due to natural unemployment rates; aims focus on low, not zero, unemployment.
  • C: Equal incomes contradict market incentives; revenue increase is a fiscal tool, not a primary aim.
  • D: Environmental protection is a modern goal but not core to overall economy performance; interest rates are a tool, not an aim.

Final answer: A

Topic: The macroeconomic aims of government

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