MAIN OBJECTIVES OF GOV Flashcards
MACROECONOMICS IS ALL ABOUT
THE performance of an economy
what dop core indicators tellus
tell us about how the econ is doing
what are the 4 main objectives of government macroeconomic policy
economic (growth)
price stability (inflation)
minimising (unemployment)
a stable balance of payments on current account.(trade
state the 5 core indicators
growth
unemployment
inflation
trade
distribution of income
what does growth indicate
income living standards
what dpes unemployment indicate and tell us about
the jobless
what does inflation indicate
the rate of growth of prices
what does trade indicate
value of imports compared to exports
what does distribution of income indicate and how is this different to (economic) growth
not just whether income’s are rising but how theyre distributed across households in teh economy
what does having specifc macro economic objectives allows us to do
see and measure whether theyre being met
what is the OBJECTIVE for growth
3s’s
strong
sustained
sustainable
growth
why doe we want growth to be stroing and high
its a measure of income lviing standards so ahving high and strong growth means strong and hihg incomes living standards
why do we want growht to be sustained and sustainable
we want the way were groiwng to continue overtime
so
without excessive inflationary pressures
without excess environmentl damage
what is the OBJECTIVE for unemploymenr
low/full unemployment
what does low/full unemployment show
the economy is performing strongly
as they are making use of the labour FOP therefore likely to have more output and therfore growth
what is the OBJECTIVE for inflation
low and stable
2% (plus or minus 1) - all econ have a target around this figure
Why is 0 inflation not desirable
3 points
the costs of zero inflation are likely to be large and permanent:
a continuing loss of 1 to 3 percent of GDP a year,
with correspondingly higher unemployment rates.
why is lwo and stable inflation important
hyperinflation / hyperdeflation can ruin an economy
as impact living standards and growth
what is the goal(OBJECTIVE) for trade
balanced trade
what does balanced trade mean
balance between value of exports and improts
why do we want baalnced trade
trade deficits and trade surpluses can be bad
trade (surpluses are less bad)
what is the goal for distribution of income
FAIR distribution of income
describe whats special about the figure for fair dsitribution of incom
no eocn has prrecise figure -its someone’s opinion
as the fair distribution of income is someones opinion what type of consideration is it
NORMATIVE
As ‘fair’ ditribution of income is a normative consideration gow can we evalaute , what can we say
!!!!!
as its someones opinion is dependent of the governemtn at teh time
therfore obj of fair is opinionated
what acronmy can we sue to sum up gov obj
Trade
Inflation
Growth
(u)Employment
Redistribution of Income
Stability
why is stability importan
macro economics is all about achieving economic stability
What s macroeconomic stability
Trade
Inflation
Growth
Employment
all being met at the same time
What are the big daddys
trade
growth
employment
stable inflaiton (price stability)
what happens if im able to meet the big daddys at the same time
i get a stable economy
what are other non core macro obj
3
sound gov finances
environmental sustainability
productivity growth
what is sound gov finances about
making sure the economy can pay its way in the future
whatis environemntal suataibiltuy about
2 marks
not destroying the environment
minimally impacting the enviro
what do we want to ensure about productivity growth
rising as the years go on
(proably to remain comp and strong as the years go by, tech and stuff + otehr countries get more productive and better casue of new tech and systems & ways of doing things)
what signficant about the importance attached to the different objectives
they change overtime
- maybe the gov meets growth and low unemployment but redistirbution of icnome is not right i.e in one area
