Answer :
Final answer:
Price Stability is the macroeconomic goal aimed at minimizing price level increases to avoid inflation. Efforts to decrease unemployment to zero by increasing aggregate demand could cause short-run inflation, with prices stabilizing at a higher level in the long run. Option A is correct.
Explanation:
The macroeconomic goal that attempts to minimize price level increases is known as Price Stability. This goal is crucial to maintain the purchasing power of money and avoid the negative impacts of inflation, which can erode consumer confidence and savings. In the context of macroeconomic policy, attempts to achieve zero percent unemployment by massively increasing aggregate demand could lead to inflation in the short run as the increased demand pushes up prices. This is illustrated by the aggregate demand shifting to the right on the aggregate demand/aggregate supply diagram. In the long run, however, output would likely return to its natural level as supply adjusts, but at a higher price level, representing sustained inflation.
For policy purposes, full employment does not mean an unemployment rate of zero percent but rather a sustainable level of unemployment, accounting for normal job turnover and short-term unemployment. Trying to achieve literal full employment could thus lead to excessive inflationary pressures instead of just low unemployment levels.
Therefore, while the government does have the goal of increasing employment, it must balance this with the goal of maintaining stable prices for overall economic health.
Final answer:
Price Stability is the macroeconomic goal that attempts to minimize price level increases.
Explanation:
The macroeconomic goal that attempts to minimize price level increases is Price Stability.
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