What are the three domestic macroeconomic policy goals? Explain each in detail.

There are three goals that macroeconomic policymakers are generally trying to accomplish.  These three goals are: 1) economic growth, 2) low inflation, and 3) low unemployment.

Economic growth is the first of these goals. Economic growth can be defined as an increase in the country’s ability to produce goods and services.  Policymakers will want to help the country’s economy increase the amounts of resources that it has available for use.  Economic growth is good because it means that people in the country have more goods and services and, thereby, a higher standard of living.

A second goal is low unemployment.  This goal generally goes along with economic growth.  When the economy grows, unemployment is generally low.  Low unemployment is good partly because it means that more of the people who want work will have it and partly because it means that more people are making goods and services to increase the standard of living in the country.

Finally, macroeconomic policy tries to keep the rate of inflation low.  This can be difficult in times of economic growth and low unemployment because economic growth and low unemployment can bring about inflation.  Inflation is the increase in the average price level in the economy.  When the prices of goods and services in general rise, the economy experiences inflation.  Policymakers try to keep inflation low because high inflation harms people who are on fixed incomes and because high rates of inflation make it less likely that people will want to lend money.

Macroeconomic policymakers, then, attempt to achieve all three of these goals, even though the goals can be hard to achieve simultaneously.