2.6.1: Possible macroeconomic objectives

Economic growth

• Governments tend to have growth rate of 2.4%- sustainable growth for the long run

• Governments may aim to increase development before growth in emerging economies or markets- will improve life expectancy, living standards and literacy rates

Low unemployment

• Employment is aimed to be as full possible

• Frictional unemployment is accounted

• Target unemployment is around 4%

Low and stable inflation

• Target rate is 2.4%

• Is measured with CPI

• Helps governments make decisions

Balance of payment equilibrium on current account

• Governments aim for the current account to be satisfactory- not a large deficit

• An equilibrium would mean the country can sustainably finance the current account which is important for long term growth

Balanced government budget

• Ensures the government keeps control of state borrowing

• Ensures national debt doens’t escalate

• Allows for cheap borrowing for the government in the future

• Makes repayment easier

Protection of the environment

• Aims to provide long run environment stability

• Ensures resources are not exploited and used sustainably

• Ensures there isn’t excessive pollution

Greater income equality

• Income and wealth distributed equitably

• The gap between the rich and poor isn’t large- fairer society