2.6.1 Possible macroeconomic objectives

Question 1

What is a macroeconomic objective?

Answer 1

A goal the government would like to achieve for the economy as a whole

Question 2

What are the main areas related to the macroeconomic objectives?

Answer 2

• price inflation
• unemployment
• balance of payments on the current account
• government budget
• economic growth
• environment
• distribution of income

Question 3

What is the government’s aim for inflation?

Answer 3

To have a low and stable rate of inflation

Question 4

What is the government’s aim for unemployment?

Answer 4

To have a low unemployment (as close to full employment as possible - a low level of unemployment will always exist due to technological advancements and movement between jobs)

Question 5

What is the government’s aim for balance of payments?

Answer 5

For the balance of payments on the current account to be in equilibrium/improved (increasing exports and reducing imports)

Question 6

What is the government’s aim for the government budget?

Answer 6

To have a balanced budget (balancing the level of taxation revenue collected with levels of expenditure, to avoid a budget deficit or worsening one)

Question 7

What is the government’s aim for economic growth?

Answer 7

To have a steady, sustainable and predictable growth rate

Question 8

What is the government’s aim for the environment?

Answer 8

To delay global warming/climate change

Question 9

What is the government’s aim for distribution of income?

Answer 9

To achieve an equitable distribution of income, meaning that they want to close the wealth gap