Macroeconomic Objectives Flashcards
What are the 7 macroeconomics?
- Stable low inflation
- Sustainable growth
- Improvements in productivity
- High employment
- Rising living standards and a fall in relative poverty
- Sound government finances
- Sustainability
What is the long run trend rate of Economic Growth?
the average sustainable rate of economic growth over a period of time
What are the 4 main objectives of macroeconomic stability?
- economic growth
- low inflation
- low unemployment
- stable balance of payments
Why do governments not aim for 0% unemployment?
Employees would need to remain in their existing jobs, with no workforce leavers or entrants, contraining company growth
Which economic agent decides the target rate of inflation?
interest rates
Which range of inflation is considered ‘acceptable’?
inflation target of 2%
Which measure does the Bank of England use here?
CPI
What happens if the rate of inflation falls outside this range?
some people may put off spending because they expect prices to fall
Why do governments aim for equilibrium on the current account?
A balance of payments equilibrium on the current account means the country can sustainably finance the current account, which is important for long term growth
Why does the government aim for a balanced government budget?
ensures the government keeps control of state borrowing, so the national debt does not escalate
Why do governments aim for environment sustainability?
The environment provides other services that enable economic activity
