Gov Objective

Question 1

what are the 4 macroeconomic objectives?

Answer 1

economic growth, inflation,unemployment and balance of payment

Question 2

gov.t objective : economic growth.

Answer 2

Uk - long run trend of economic growth is 2.5% - govt.t aims for a sustainable econ growth in the long run

Question 3

types of economic growth

Answer 3

actual growth - short -term increase in gdp due to high use of resources
potential growth - long- term increase in productive capacity

Question 4

govt.t objective : unemployment

Answer 4

gov.t wants to minimise unemployment , aiming for an unemployment rate of round 3%

Question 5

gov.t objective ; inflation

Answer 5

target of 2%, provides price stability for firms and consumers

Question 6

govt objective ; balance of payment

Answer 6

aims for the current acc to be satisfactory, no large deficit. a balance of payment equilibrium of current acc means, country can sustainably finance the current acc in the long-run

Question 7

trade offs with economic growth as an objective

Answer 7

econ growth vs current acc( more import), inflation( rise in price), budget deficit( to reduce this - more tax revenue) and environment (negative externalities such as pollution

Question 8

trade offs between unemployment and inflation

Answer 8

rise is econ growth - more jobs which means less unemployment- wages increase so more consumer spending - increase in price levels ( shown in phillips curve