Economic Stability Theory

Economic Stability Theory explores how governments and central banks manage economic fluctuations to maintain steady growth, low inflation, and low unemployment. It emphasizes policies—like controlling interest rates and spending—that prevent drastic ups and downs in the economy. Stable economies foster confidence among consumers and investors, encouraging consistent economic activity. The theory notes the importance of balancing growth with inflation control, aiming for sustainable development without severe booms or recessions. Overall, it guides policymakers in creating conditions that promote long-term economic health and stability.