Macroeconomics L11 Flashcards
What are the four variables relating to macroeconomic objectives
Economic growth, unemployment, inflation, current account on the balance of payments
What are other variables governments have objectives in relation to
Government budgets, the environment and income inequality
Objective in relation to economic growth
- definition: increase in real output over time
- positive, steady and sustainable economic growth
- measured in rate of real GDP change
Objective in relation to unemployment and employment
- where people who are economically active are out of work but willing to work
- low and stable rate of unemployment
- measured by labour force survey
Objective in relation to inflation and deflation
- definition: a sustained increase in the general price level over time
- price stability - low and positive inflation
- measured by CPI
Objective in relation to the Balance of payments on current account
Definition:inflow and outflow of goods and services
-long run equilibrium (small deficit or surplus)
Objectives in relation to government budgets (2)
- balanced government budget to ensure government keeps control of state borrowing ( debts do not escalate )
- allows government to borrow cheaply in the future when needed (makes repayments easier)
Objectives in relation to the environment
- ensure long run environmental stability
Objectives in relation to income distribution
- greater income equality (higher tax income)
Disadvantages of economic growth in high income countries
- already been through industrialisation and are at forefront of tech developments
- rapidly ageing population where no of workers are falling
- growth rate is hard to obtain in these circumstances
What is the target for consumer price inflation in the UK
2%
Why will macroeconomic objectives vary from country to country
To reflect differences in the stage of economic development and the political priorities of individual governments.
