possible macroeconomic objextives

Question 1

what is a macroeconomic policy

Answer 1

it aims to control the level of activity in the economy so that the standard of living improves and stability is maintained

Question 2

economic growth

Answer 2

if the economy grows too fast, inflation may accelerate bcs demand is growing and supply can’t keep up
this high growth rate becomes unsustainable
gov strives to manage economic growth so that it is not too fast or too slow

Question 3

low unemployment

Answer 3

a low level of unemployment is needed to maximise incomes and output and is seen as desirable for both social and political reasons
unemployment increases poverty and wastes resources
economies that have strong economic growth have low unemployment

Question 4

benefits of low unemployment

Answer 4

higher consumption and aggregate demand
higher incomes
improved standard of living
higher tax rev for government
lower gov spending on unemployment related welfare
reduced poverty

Question 5

low and stable rate of inflation

Answer 5

low and steady rate is desirable
too high is damaging to economy bcs it’s unpredictable and makes planning and investment more difficult
target is 2%
currently 2.6%
main way of dealing with inflation is interest rates

Question 6

balance of payments equilibrium on current accounts

Answer 6

a positive balance of payments means that the money we earn from selling exports is greater than money we pay for imports
if imports exceed exports there’s a trade deficit, if exports more than imports surplus

Question 7

what is the current account

Answer 7

it’s the sum of the balance of trade ( goods and services exported less the value of all imports) net income from abroad and net current transfers