2.6 (Introduction to Macroeconomic Policy)

Question 1

What is macroeconomics?

+ what is fiscal and monetary policy driven by?

Answer 1

branch of economics that studies the behaviour of an overall economy, which encompasses markets, businesses, consumers and governments

+ short and long-term political interests

Question 2

What are the 5 main macroeconomic aims?

Answer 2

1) steady & sustainable rate of economic growth
2) low levels of unemployment
3) low & stable rates of inflation
4) favourable balance of payments positions
5) equitable distribution of income

Question 3

Why is steady & sustainable increase in national output a macroeconomic aim?

Answer 3

Governments want to remain in power:
- Therefore, they work to create sustainable economic growth; to increase wealth & living standards
- Widespread poverty & discontent is not usually associated with stable governments