Q.State and briefly explain the four main objectives of macroeconomic policy.

Macroeconomic policy aims to keep the whole economy healthy, pursued through fiscal and monetary policy; its four standard objectives cover growth, prices, jobs and external balance.

Macroeconomic policy seeks to steer the whole economy toward outcomes that benefit society, using fiscal policy (government spending and taxation) and monetary policy (the central bank's control of money supply and interest rates). Its four main objectives are:

1. Economic growth. A steady increase in the economy's real aggregate output over time raises average incomes and living standards and provides the resources to reduce poverty and fund public services. Growth comes from expanding productive capacity — more investment, better technology and a more skilled workforce. For a developing economy, sustained, broad-based growth is arguably the most important long-run objective.

2. Price stability. A reasonably stable general price level — avoiding both high inflation and deflation — protects the value of money, people's savings, and the incomes of those on fixed pay. High inflation erodes purchasing power and hurts the poor most; deflation can depress spending and output. Price stability is a central goal of monetary policy.

3. Full employment. This means that everyone willing and able to work at the going wage can find a job — that is, involuntary unemployment is eliminated. Unemployment wastes the economy's most valuable resource, causes hardship, and keeps output below potential. Raising aggregate demand toward full employment was Keynes's central policy concern. …

A frequent error is listing policy INSTRUMENTS (fiscal policy, monetary policy) as if they were objectives — instruments are the MEANS, whereas the objectives are the desired OUTCOMES (growth, …