2.9 UK Macroeconomic Objectives

Question 1

What are the main 4 macroeconomic objectives ?

Answer 1

• High Economic Growth
• Low and Stable Inflation (Price Stability)
• Reduction In Unemployment
• A balanced BoP

Question 2

What are the 3 other macroeconomic objectives ?

Answer 2

• A Balanced Budget
• Make the distribution of Income more equal
• Protection of the Environment

Question 3

What is 1. High Economic Growth ?

Answer 3

Increase in real output (GDP) which is sustained year on year rather then a boom then bust then recession.

Question 4

What is 2. Low And Stable Inflation ?

Answer 4

Inflation is kept low and on target to promote confidence (Target = 2% , CPI +- 1%)

Question 5

What is 3. Reduction In Unemployment ?

Answer 5

More people who want a job can find them thus closer to PPF

Question 6

What is 4. A Balanced BoP ?

Answer 6

Government aims to achieve equilibrium or surplus between the Current Account and Financial Account. (X>M)

Question 7

What is 5. A Balanced Budget ?

Answer 7

A plan of intended TaX Revenue and how much is Gov. Spending . Must borrow money to finance Budget Defecit.

Question 8

What is 6. Make the distribution of Income more equal ?

Answer 8

Provide a fair society (gap between rich and poor)

Question 9

What is 7. Protection of the Environment ?

Answer 9

Ensuring the environment isn’t harmed due to economic activity

Question 10

How does the government achieve the Macroeconomic Objectives ?

Answer 10

• Fiscal Policy
• Monetary Policy
• Supply Side Policies

Question 11

What is Fiscal Policy ?

Answer 11

Use of government Budget to influence the level of demand in the economy

(Set by the Chancellor of The Exchequer)

Question 12

What is Monetary Policy ?

Answer 12

Use of interest rate to influence the level of demand in the economy

Question 13

What are Supply Side Policies ?

Answer 13

Measure to make markets operate more efficiently.