Macroeconomic objectives of governments

Macroeconomic objectives

Macroeconomic objectives

The goals that governments aim to achieve through their economic policies. They are crucial for the overall economic health and growth of a nation. Examples include:

1. Increase Gross Domestic Product = economic growth
2. Lower rate of unemployment
3. Stable exchange rates
4. Long-lasting balance of payments between the value of imported and exported goods
5. Improved productivity, and international competitiveness
6. Improved public services, and sustainable government finance
7. Sustainable overseas trade
8. Improved national wellbeing

9. Control of cost and price inflation

Economic growth

An increase in the production of economic goods and services in one period of time compared to another period of time. It’s often measured in terms of gross national product (GNP) or gross domestic product (GDP). It’s often driven by an increase in capital goods, labor force, technology and human capital.

Gross Domestic Product (GDP)

The measure of economic activity within a country. It’s the total market value of all final goods and services produced over a specific period within a country’s borders. It’s important monetary value that gives an economic snapshot and is calculated using expenditures, production and incomes.

Real Gross Domestic Product (GDP)

A macroeconomic measure of the value of economic output adjusted for price changes such as inflation and deflation. It’s an important metric for calculating economic growth.

Inflation

A measure of how quickly prices of goods and services are increasing. When general price level rises, each unit of currency buys fewer goods and services.

Imports

Goods and services that a nation buys from other countries. They provide more choices to consumers and are sometimes manufactured more cheaply than domestically produced equivalents. A country’s GDP can be influenced by imports and if there is a high level of imports compares to exports, there can be a disbalance of payments and negatively effects a country’s exchange rate.

Exports

Goods and services that a nation sells to other countries. Exporting can increase a country’s sales potential and stimulate economic growth. A country’s GDP can be influenced. Levels of inflation can also be influenced.

Exchange rate

The rate at which one currency will be exchanged for another. It affects trade and movement of money between countries. It’s impacted by both the domestic and foreign currency values. A weaker domestic currency stimulates exports and makes imports more expensive, while a strong domestic currency hampers exports and makes imports cheaper.