Economics • Economic BasicsHard
What does the 'Meade Conflict' in international economics refer to?
A. The incompatibility between internal balance (full employment) and external balance (balance of payments equilibrium) using a single policy instrument✓ Correct Answer
B. The trade dispute arising from unfair export subsidies in agricultural goods
C. The conflict between tariff reduction and non-tariff barrier enforcement
D. The divergence between capital mobility and fixed exchange rate regimes
💡 Solution & Explanation
The Meade Conflict highlights the fundamental policy dilemma where an economy using a single instrument cannot simultaneously attain internal macroeconomic balance and external balance of payments equilibrium. Other choices referring to unfair trade subsidies or tariff barriers concern international trade disputes rather than macroeconomic policy coordination. Named after economist James Meade, it underscores the necessity of deploying multiple policy tools. International monetary economics principles frequently appear in specialized economics syllabi.
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