what is macroeconomics?
Macroeconomics considers the performance of the economy as a whole. Many macroeconomic issues appear in the press and on the evening news on a daily basis. When we study macroeconomics we are looking at topics such as economic growth; inflation; changes in employment and unemployment, our trade performance with other countries (i.e. the balance of payments) the relative success or failure of government economic policies and the decisions made by the Bank of England.
- Economic Growth - trends in national output and living standards
- Unemployment - the causes and consequences of unemployment and the reasons for the changing structure of the work force
- Inflation - the economics of price inflation - who loses and who gains and what can we do about inflation?
- International trade - does the UK pay its way in trading with other countries?
- Interest rates - should interest rates rise or fall? How do changes in interest rates affect consumers and businesses in the economy
Objectives of Government Economic Policy
Government management of the economy is always a key political issue - not least at election time, when the government must defend its economic record over the previous four or five years. Each government must set targets and objectives when it assumes power - and often, economic objectives lie right at the heart of a government's overall strategy.
The Labour Government has several current objectives:
- Stable low inflation with prices rising at a rate within the target range of 1.5% - 2.5% per year
- Sustainable growth - as measured by the rate of growth of real Gross Domestic Product
- Higher levels of investment and productivity - to improve international competitiveness
- High employment - the government wants to achieve full-employment
- Rising living standards and a fall in relative poverty
- Sound government finances (including control over government borrowing and the national debt)
The key point is that Government through its economic policies, aims to improve the economic welfare of the country as a whole.
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