In the economic cycle, there is often a trade-offs between the different macroeconomic objectives. If the government attempts to increase AD by implementing ____ fiscal policy, we will get an increase in real ____ and therefore higher ____ growth but at the cost of higher inflation. However, through supply-side policies, you can reduce unemployment and ____ economic growth without causing inflation. During periods of economic growth, consumers have high levels of spending. Some consumer spending will be on ____ so there is likely to be more spending on imports when an economy grows. This leads to a ____ of the current account ____. However, export-led growth, such as that of China and Germany, means a country can run a current account ____ and have high levels of economic growth. In the short run, there is a trade-off between the level of ____ and the ____ rate. As economic growth increases, unemployment falls due to more ____ being created. However, this causes ____ to increase, which can lead to more consumer ____ and an increase in the average price level - inflation.

Trade-offs in Macro Objectives

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