2.6.1- Possible Macroeconomic Policies Flashcards
What are the 7 key macroeconomic policies?
- Balance of payments
- Unemployment
- Growth
- Inflation
- Income inequality
- Sustainability
- Gov budget/ national debt
What is the gov aim for balance of payments?
A small surplus
What is the aim for unemployment?
Aim is near full employment, but 7% is comfortable due to frictional unemployment
What type of work do the government want the workforce to be employed in?
Productive work
What is the gov aim for growth?
2%
What may be a governments aim in emerging and developing economies?
To increase economic development before growth to improve living standards, life expectancy, and literacy rates
What is the UK inflation target?
2% (+- 1%)
Why is inflation being at 2% useful?
Provides price stability for firms + consumers and will help them make decisions in the long run
What happens if the rate of inflation falls 1% outside of the target?
The governor of the Bank of England has to write a letter to explain why this happened and what the bank intends to do do about it
What is the aim for income inequality?
To reduce it
What is the aim for sustainability?
To ensure resources aren’t exploited for future generations
Why is keeping control of state borrowing good for the government?
It allows them to borrow cheaply in the future and make repayments easier
What is the UK target for deficit?
Less than 3% of GDP
What is the UK target for debt?
Less than 60% of GDP
