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natural resources
. Without growth, these resources would last 
longer. 
(b) 
Much economic activity tends to create 
pollution
, such as acid rain and nuclear waste. It leads to 
emissions which threaten to produce disruptive climatic changes through an increase in the 
'greenhouse effect'. It results in more roads, new and larger towns, and less unspoilt countryside. 
(c) 
There is a danger that some sections of the population, unable to adapt to the demands for new 
skills and more training, will not find jobs in the developing economy. This 
structural 
unemployment 
might create a large section of the community which gains no benefit from the 
increase in national income. 
(d) 
In order to achieve growth, firms need to 
invest more 
and this requires financing. This finance 
can only come from 
higher savings 
which in turn require the population to consume less. In the 
short run, therefore, higher growth requires a cut in consumption. 
 
8
Government policies for managing the economy 
Macroeconomic policy objectives 
relate to economic growth, inflation, unemployment and the balance 
of payments.
All modern governments are expected to manage their national economies to some extent. Electorates 
generally suppose that government action can support or hinder the growth of prosperity and look to 
them for serviceable macroeconomic policies.
There are four main objectives of economic policy, though debate continues about their relative priority. 
(a) 
To achieve economic growth
, and growth in national income per head of the population. Growth 
implies an increase in national income in real terms. Increases caused by price inflation are not 
real increases at all. 
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