1. Introduction To Macroeconomics

Question 1

What are the main macroeconomic aims of a government?

Answer 1

• Economic growth (sustained, sustainable and inclusive)
• Price stability
• Full employment
• Favourable balance of trade

Question 2

What affects the macroeconomic condition of a country’s economy?

Answer 2

• Global (external) changes
• Domestic (internal) changes
• Trade-related policies
• Macroeconomic policies

Question 3

What are the types of macroeconomic policies?

Answer 3

• Demand management policies*
• Supply side policies

Demand management policies consist of fiscal (government-based) policies and monetary policies such as interest rate policies and exchange rate policies.

Question 4

What does the macroeconomic condition of a country affect?

Answer 4

• Living standards, i.e. SOL (material and non-material aspects) of the citizens of the country
• Economic performance of the country i.e. achieving the four macroeconomic aims of a government

Question 5

On the macroeconomic level, what are some of the issues faced by a government?

Answer 5

• Undesirable economic growth*
• Unemployment
• Price instability
• Persistently large BOT deficit or surplus

Undesirable economic growth can be in various forms such as persistently low or negative EG, unsustainable EG or non-inclusive EG.

Question 6

What measures do governments take to deal with the macroeconomic issues that they face?

Answer 6

• Macroeconomic policies
• Trade related policies