Economic Planning

Economic Planning

Economic Planning A third objective is the avoidance of inflation, which may be seen as an end in itself or as subordinate to a fourth stability in the balance of payments. Where inflation is treated as a nuisance solely because of its effects on the balance of payments the requirement need be only that inflation should not proceed faster than in other countries. Balance of payments stability is normally an objective of prime importance. The avoidance of inflation may be sought also because of internal injustices and distortions: inflation erodes the value of money savings and may in time undermine the will to save; it arbitrarily redistributes income from those groups living on incomes relatively fixed in terms of money to others. A filth objective of economic policy is that government s try to curb exploitation by monopolies within the economy. Sixth, they may seek a more 'just' distribution of real income by taxation and providing subsidized goods and services.

The main problem is to balance the different objectives against one another and against other aims, since pursuit of all of them at once may lead to conflicts e.g. between growth and price stability.

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