2.6.1 - Possible macroeconomic objectives

Question 1

What is the definition of economic growth?

Answer 1

The real value of goods and services produced in a country or area as measured by the annual percentage change in real national output.

Also a long-run increase in a country’s productive capacity.

Question 2

What is unemployment?

Answer 2

This is when people are willing and able to work and actively seeking work but cannot find a job.

Question 3

What is the definition of inflation?

Answer 3

A sustained increase in the general price level displayed as a percentage.

Question 4

What are the 4 variables that can measure national economic performance?

Answer 4

Economic growth, unemployment, inflation and balance of payments.

Question 5

What are the main 7 macroeconomic objectives?

Answer 5

Economic growth, unemployment, current account, budget deficit, inflation rate, environment and income equality.

Question 6

What the UK’s target for unemployment?

Answer 6

3%

Question 7

Name 2 benefits of economic growth

Answer 7

• Job creation
• Rising incomes
• Improved living standards
• Improved international competitiveness of the UK economy
• Multiplier and accelerator benefits
• Improved confidence of businesses and consumers spending
• Tax revenues are likely to increase allowing government to reinvest in infrastructure or public services
• Lower government spending on job seekers allowance and associated benefits

Question 8

Name 2 benefits of low unemployment

Answer 8

• Higher consumption and AD
• Higher incomes
• Improved living standards
• Higher tax revenue for government
• Lower government spending on unemployment related welfare
• Improved productivity of UK economy
• Reduced poverty
• Improved social benefits

Question 9

What is a budget surplus?

Answer 9

When tax revenue is higher than government expenditure.

Question 10

What’s a budget deficit?

Answer 10

When government expenditure is higher than the tax revenue.