2.6.1: Possible Macroeconomic Objectives

Question 1

What are the government macroeconomic objectives?

Answer 1

• Sustainable economic growth
• Low inflation
  -Low unemployment
• Low income inequality and poverty
• Stable current account (trade)
• Stable balance of payments
• Protecting the environment

Question 2

Sustainable economic growth

Answer 2

• Governments aim for sustainability; in terms of the environmental impact
• Also in terms of promoting long term growth that avoids busts/ recession in the future

Question 3

Low Inflation/ Price Stability

Answer 3

• UK government target or inflation is 2%
• The most common measure of price stability is changes in CPI

Question 4

Low unemployment

Answer 4

• Unemployment can never be 0% but governments aim to keep it low

Question 5

Stable current account

Answer 5

• there are no direct targets for the current account but governments do try to improve their international competitiveness
• so exports are promoted

Question 6

Low income inequality and poverty

Answer 6

• High inequality and poverty can lead to social unrest as well as impact the standard of living