4.2.1.1 - Objectives

Question 1

What are the 7 macro objectives

Answer 1

• economic growth
• low unemployment
• low inflation
• balanced balance if payments
• balanced gov budget
• protection of the environment
• greater income equality

Question 2

What is economic growth

Answer 2

The rate of change of a countries output

Question 3

How is economic growth measured

Answer 3

By GDP, the sum on a country’s output over 1 year

Question 4

Gov target for economic growth:

Answer 4

the persuit of sustainable economic growth (2% per year). In terms of actual and potential productivity. It is a crucial goal of Macroeconomic performance

Question 5

How does economic growth link to other objectives

Answer 5

If economic growth occurs, unemployment decreases as more jobs are created

Question 6

Benefits of economic growth

Answer 6

· Job creation
· rising incomes
· improved standards of living
· lower government spending on benefits
- tax revenue increases so government spending increases

Question 7

Define unemployment

Answer 7

People that are actively seeking work but are unable to find a job

Question 8

How us unemployment rate measured

Answer 8

By the unemployment rate (%)

Question 9

What is the gov target for unemployment

Answer 9

a low unemployment rate, this is because high unemployment is a waste of resources and is an indicator of poor economic performance. When unemployment rate is high, income tax decreases, therefore the governments income is less.

Question 10

How does low unemployment to another macro objective

Answer 10

Low unemployment allows for economic growth to occur as productivity is high to output increases.

Question 11

Benefits of ow unemployment

Answer 11

• higher consumption
• standards of living
• higher tax revenue ( due to increased income tax)
• Improved Productivity
• reduced poverty
• social benefits ( reduced crime and improved wellbeing)

Question 12

Define inflation

Answer 12

The rate of change of average prices in a economy

Question 13

How is inflation measured

Answer 13

By the CPI

Question 14

What is the gov target for inflation

Answer 14

the government do not manage inflation as people wanted more transparency after long periods of high Inflation In 1970s and 1980s. The bank of England are now responsible of managing Inflation. They aim for low inflation at 2 %. With a +/- 1 maintenance to create stability.

Question 15

How does low inflation link to another macro objective

Answer 15

low inflation can lead to economic growth as the government will receive more income in VAT.

Question 16

Define balance of payments

Answer 16

Measures the uk’s economic activities with other countries

Question 17

How is balance of payments measured

Answer 17

Either in surplus or deficit:
- surplus= exports > imports
- deficit = imports > exports

Question 18

Define balanced gov budget

Answer 18

Gov revenue = gov expenditure

A budget surplus = revenue > expenditure
Budget deficit = expenditure > revenue

Question 19

Why greater income equality important

Answer 19

More equality leads to better living standards for all and a happier society due to economic growth and the trickle down effect

Question 20

Why is protection of the environment important

Answer 20

Global warming and climate change are high on the political agenda
The gov look to develop a sustainable future particularly for out growing energy needs

Question 21

Gov goal for protection of the environment

Answer 21

• manage / decrease climate change and global warming
• aim for a sustainable future, particularly for our energy demands

Question 22

How is the protection of the environment going to be achieved

Answer 22

• supporting businesses through investment grants
• subsidising sustainable/ green products

Question 23

Gov goal for income equality

Answer 23

• extreme income equality is viewed as socially unacceptable
• all citizens should have access to fair wages and a fair days work

Question 24

How will income equality improve the economy

Answer 24

• increasing income equality will lead to higher levels of economic growth
• allowing better living standards for society
• and a happier society overall

Question 25

Hoe does unemployment conflict with inflation

Answer 25

• increasing employment levels will lead to prices riding at a higher level
• this is because incomes increase, so consumption will increase
• this incentivises firms to raise prices as they will be able to increase their profit

Question 26

How does balance of payments conflict with growth

Answer 26

• when growth occurs, it is assumes that consumer spending increases - causing a rise in import spending
• making exports less competitive
• leading to a higher number of withdrawals than injections

Question 27

How does economic growth conflict with protection of the environment

Answer 27

• a higher gdp will lead to higher levels of pollution and consumption of non renewable resources,
• for example increased imports produces fossil fuels by the transportation and productions of the goods