The objectives of government economic policy Flashcards
What is macroeconomics?
Macroeconomics refers to whole economy on, for example on a national scale.
What are the objectives of government economic policy?
Any government will aim to influence how the macroeconomy performs over time and will have macroeconomic objectives. These objectives are goals or aims they wish to achieve for the whole economy.
How do the government aim to achieve these macroeconomic objectives?
The governments uses economic policies, tools and methods, to influence the macroeconomy.
What are the main objectives of gov macroeconomic polices?
- economic growth
- price stability
- minimising unemployment
- stable balance of payments
- balancing the budget
- equitable distribution of income
What is economic growth?
Economic growth measures how much the value of output produced in an economy has grown over a period of time, (a year). It is calculated as % change in national income over a period of time.
What is price stability?
How fast the average level of prices of a range of goods and services rises over a period of a year
What does it mean by minimising unemployment?
This means minimising the numbers of those of working age who are for work but are unable to find a job.
What does it mean by stable balance of payments?
The balance of payments measures the difference between the value of goods and services exported and imported.
What does it mean by balancing the budget?
The government want the value of gov expenditure and the value of taxation to be the same as each other, so that the gov’s budget is balanced.
What does it mean by an equitable distribution of income?
Incomes are not shared equally across households in the economy. Achieving this means the government would like to ensure that the gap between the richest and poorest does not become excessively wide.
What does it mean by conflicting objectives?
This means achieving different economic objectives simultaneously is difficult. For example, success in reduced unemployment has often come at the expense of prices rising at faster rates. Conflicts that do exist often said to exist in the short term and in the long term it will be possible to achieve all obj at the same time.
