the measurement of macroeconomic performance

Question 1

how many main macroeconomic objectives do the government have?

Answer 1

four

Question 1

what are the four main macroeconomic objectives?

Answer 1

• economic growth
• price stability
• minimising unemployment
• a stable balance of payments on current account

Question 2

what other macroeconomic objectives may the government have besides the four main objectives?

Answer 2

• balancing the budget
• achieving an equitable distribution of income

Question 3

briefly explain the trade-off between unemployment and inflation

Answer 3

• in the short run, there is a trade-off between the level of unemployment and the inflation rate, this is illustrated with a Phillips Curve
• as economic growth increases, unemployment falls due to more jobs being created
• however, this causes wages to increase, which can lead to more consumer spending and an increase in the average price level (inflation)
• the extent of this trade off can be limited if supply side policies are used to reduce structural unemployment, which will not increase average wages

Question 4

what is productivity?

Answer 4

output per worker per period of time