Measurement of macroeconomic performance and macroeconomic objectives

Question 1

Define macroeconomic objectives.

Answer 1

Goals a government wants to achieve for the whole economy.

Question 2

Explain the economic growth objective.

Answer 2

Measures how the value of output produced in a economy has grown, usually over a one-year period. It is calculated as the percentage change in national income over a period of time.

Question 3

Explain the price stability (inflation) objective.

Answer 3

Concerned with how fast the average level of prices of a range of goods and services rises over a period of on year.

Question 4

Explain the minimising unemployment objective.

Answer 4

Involves minimising the numbers of those of working age who are looking for work but are unable to find a job.

Question 5

Explain the stable balance of payments on current account objective.

Answer 5

The current account of the BoP measures the difference between the value of goods and services sold abroad and the value of goods and services bought from abroad and other flows of income. The government would broadly like to see the outflows of money balanced with the inflows of money through these items.