There are numerous conflicts that can occur in attempting to achieve these objectives. For example, stimulating the economy to reduce unemployment leads to increased import expenditure which may lead to deterioration in the balance of payments. Another problem is that attempts to cure unemployment by fiscal and monetary expansion may lead to a rise in the inflation rate of the country as aggregate demand rises. When the government seeks to bring inflation under control this may involve having to pursue tighter fiscal and monetary policies which by lowering investment and infrastructure spending can dampen future economic growth and lead to increased unemployment.

Governments with excessive current account deficits will also find themselves in the position of trying to curb import expenditure. This will involve reducing government expenditure and/or raising taxes and adopting tougher monetary policy by raising interest rates. This in turn will raise unemployment and cause slow economic growth especially in an open economy if the higher interest rates lead to an appreciation of the domestic currency.

If a government increase government expenditure financed by borrowed money, while this can boost short term employment and output, it might lead to higher interest rates and this can appreciate the currency lowering exports and increasing imports so worsening the balance of payments.

It should be noted that many of these conflicts are likely to be more pronounced in the short run than in the longer run. In the long run for instance, the trade-off between inflation and unemployment is less pronounced (and perhaps non-existent). Similarly, some economists argue that if an expansionary fiscal policy is used in an attempt to reduce unemployment it might work in the short run but in the longer run it will mean a higher national debt which will have to be financed by increased taxes and/or cuts in government expenditure in the future. Such policies may also crowd out private sector consumption and investment and potentially adversely affect employment and economic growth in the future.