Macroeconomics Objectives

What are the 4 macrocosmic objectives

High sustainable economic growth

Low unemployment (or full employment)

Low inflation (or price stability)

Balanced current account

What are the extra three macroeconomic objectives

Reducing the budget deficit

Reducing inequality

Environmental

What are the benefits of achieving high sustainable economic growth

Higher living standards, higher incomes so people are materially better off

Improved government finance - greater tax revenues from increased economic activity

What are the benefits of achieving low unemployment

Increased spending power for individuals

Less crime, mental health etc

Improved government finances

What are the benefits of achieving low inflation

Protects real terms spending power i.e high inflation could mean a real terms cut in wages

Encourages investment - firms are more likely to invest when prices are stable and therefore predictable

Makes firms more competitive if inflation is lower than in rival economies

What are the benefits of achieving a balanced current account

Country can afford to pay for the imports that it consumes

What are the benefits of reducing the budget deficit

A deficit means that each year there is an outflow of money

Makes borrowing more sustainable

Failing to reduce a large deficit leads to a rapid increase in national debt

What are the benefits of reducing inequality

Incentives - more equality could create greater work

Incentives for unemployed and low income workers

What are the benefits of achieving a good environment

Not causing environment armageddon

Sustainable growth - reducing environmental impact today increases the economic prosperity for people tomorrow