Government Economic Objectives.

Low inflation(Has a 2% target)

A government economic objective aimed at maintaining the general price level of goods and services to ensure stability in the economy. Inflation is the increase in the avrage price level of goods and services over time.

Real income

This is the value of income, and it falls when prices rise faster than money income.

economic growth(GDP increasing)

The increase in the production of goods and services in an economy over time, typically measured by the growth rate of real Gross Domestic Product (GDP). This objective aims to improve living standards and create jobs.

Imports and exports, the balance of payments.

The total value of goods and services brought into a country versus those sent out.

Fair distribution of income and wealth (equal society)

An economic objective that seeks to ensure a more equitable allocation of resources among individuals and groups in society.

Low unemployment (more people in work)

An economic objective aimed at reducing the number of individuals who are actively seeking work but unable to find employment, thereby increasing overall job opportunities and economic stability.

Improving living standards (higher wages)

An economic objective focused on enhancing the quality of life for individuals by increasing income levels, access to essential services, and overall well-being.

What are the main type of taxes?

Direct - from individuals (income tax) and companies (corporation tax)

Indirect - on spending’s (VAT)

How do governments raise taxes?

Governments raise taxes through various means, including implementing direct taxes on income and profits, as well as indirect taxes on goods and services.

Fiscal Policy

The use of government spending and taxation to influence the economy, aiming to manage economic fluctuations and promote growth.

Monetary Policy

The process by which a central bank manages the money supply and interest rates to achieve macroeconomic objectives such as controlling inflation, consumption, growth, and liquidity.

Interest rates

The cost of borrowing money, expressed as a percentage of the loan amount, influencing consumer spending and investment usually set by the government or central bank.

Supply-side policies

Economic strategies aimed at increasing productivity and efficiency of improving the supply of goods and services, often through tax cuts.

The three supply-side policies are

Tax cuts, removing restrictions, and investment in education.

Globalization

The process of increasing the connection and dependence among countries, leading to the exchange of goods, services, and culture on a global scale.

Exchange rates

The value of one currency in relation to another, influencing international trade and investment.

Depreciation in exchange rates

occurs when a currency loses value compared to other currencies, making imports more expensive and exports cheaper.

Appreciation in exchange rates

occurs when a currency gains value relative to others, making imports cheaper and exports more expensive.