2.6.1 possible macroeconomic objectives

Question 1

What are the 7 possible macroeconomic objectives

what are the main 4

Answer 1

-low and stable inflation/price stability
-protect the environment
-satisfactory balance of payments position/balance of payments equilibrium on current account
-sustainable economic growth
-greater income equality
-balanced governemnt budget
-low unemployment

-low unemployment
-balance of payments equlibrium on the current account
-low and stable inflation/price stability
-sustainable economic growth.

Question 2

economic growth:

what is the long run trend rate of economic growth in the UK

Answer 2

the long run trend rate of growth in the UK is around 2.5%

Question 3

low unemployment:

what does the governemnt aim the unemployment rate to be

Answer 3

the governemnt aims for the unemployment rate to be arund 3%

Question 4

low and stable inflation:

what is the governemnts inflation rate target, what is this measured by

Answer 4

the uk governemnts inflation rate aim is +-2%, measured by the cpi

Question 5

balance of payment equilibrium on the current account:

why is it important for there to be a balance of payment on the equilibrium account

Answer 5

it is important to allow the country to sustainably finance the current accont, which is important for long term growth

Question 6

how may governemtns achieve these macroeconomic objectives

Answer 6

governemnts may achieve this by either using demand side policies(fiscal&monetary) or supply side policies (interventionist and market-based)