Policy Conflicts and Trade-Offs
Policy conflicts arise because macroeconomic objectives (stable prices, full employment, growth, balanced trade) cannot always be achieved simultaneously. The Phillips curve illustrates the inflation-unemployment trade-off; oil shocks create stagflation (simultaneous inflation and unemployment).
Real World
When oil prices quadrupled during the 1973 OPEC embargo, Western economies faced stagflation — the UK saw inflation exceed 20% while GDP contracted, leaving policymakers unable to tackle both problems simultaneously.
Exam Focus
Use a specific conflict pair (e.g. inflation vs unemployment) with a diagram rather than listing all trade-offs vaguely.
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