High School

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------------------------------------------------ Objective: Identify the focus of macroeconomics and evaluate the three major economic goals.

Instructions:
1. Research "key economic indicators" and "3 macroeconomic goals."
2. Answer the following questions:

a. What is the focus of macroeconomic study and what are the three main macroeconomic goals?

b. In measuring the three key economic goals, what values (percentages) indicate that the economy is "healthy"?

c. What are the main criticisms of the GDP growth rate as a key measure of economic success?

d. Identify (list) at least three alternative "indexes" of economic success.

Note:
- Just as a doctor assesses a patient's health through vital signs like blood pressure and temperature, economists measure an economy's health through key economic indicators.
- Traditional macroeconomic goals are criticized for emphasizing economic growth over other wellbeing indicators like happiness, quality of life, sustainability, and social justice.

Answer :

Final answer:

Macroeconomics focuses on an economy's overall behavior, with GDP growth, inflation rate, and unemployment as its three key goals. Criticisms of GDP as the sole indicator of economic health include its disregard for equity, sustainability, and quality of life, leading to the rise of alternative success indexes such as the GPI, HDI, and HPI.

Explanation:

Macroeconomics and Its Three Major Goals

The central focus of macroeconomic studies is primarily on the behavior of an entire economy. It draws insight on economic elements like the GDP growth, inflation rate, and unemployment, which are also known as the three primary macroeconomic goals.

  1. GDP growth: An annual increase of 2-3% is considered a healthy and sustainable rate.
  2. Inflation rate: A low and stable inflation rate, usually around 2%, is often targeted by central banks.
  3. Unemployment: Most economists suggest an ideal unemployment rate of around 3-5%.

Limitations of GDP as an Economic Indicator and Alternative Measures of Economic Success

Reliance on GDP growth rate as the primary indicator of economic health has attracted criticism because it fails to take into account whether the growth is equitable and sustainable. Furthermore, GDP growth does not measure the quality of life, happiness, or social justice.

Some alternative economic success indexes include the Genuine Progress Indicator (GPI), the Human Development Index (HDI), and the Happy Planet Index (HPI).

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