10.1.1—Macroeconomic objectives

Macroeconomic objectives commonly include stable prices, low unemployment, sustainable growth, external balance and sometimes environmental sustainability or equity.

Each objective needs a measure and time horizon: inflation rate, unemployment rate, real GDP growth, current-account position or emissions. Objectives can conflict, and the same policy may improve one while worsening another.

A demand stimulus can reduce cyclical unemployment during a recession but increase inflation as spare capacity disappears. A supply improvement may support growth and prices over a longer horizon.

An objective is not the same as an instrument, and a headline indicator can improve while distribution or quality worsens.