HOW THE GOVERNMENT MANAGES THE ECONOMY

Economic Growth

Economic Growth

The increase in the production and consumption of goods and services over time, crucial for improving living standards, reducing poverty, and providing employment.

Low Unemployment

Keeping unemployment at a low level, contributing to economic stability and reducing social and economic costs associated with unemployment.

Price Stability

Maintaining a low and stable rate of inflation to preserve the purchasing power of money, avoid uncertainty, and protect savings and investments.

Balance of Payments Stability

Ensuring the country can meet international financial obligations by balancing imports and exports.

Redistribution of Income

Using taxation and government spending to reduce income inequalities, support lower-income households, and provide public goods and services.

Fiscal Policy

Involves government spending, taxation, and the budget deficit to influence the overall level of economic activity.

Expansionary Fiscal Policy

Aimed at boosting economic activity by increasing government spending, reducing taxes, or both, typically used during a recession.

Contractionary Fiscal Policy

Designed to reduce economic activity by decreasing government spending, increasing taxes, or both, often used to curb inflation.

Monetary Policy

Actions taken by the central bank to manage the economy by controlling the money supply, interest rates, and exchange rates.

Supply-Side Policies

Aim to improve the efficiency and productivity of the economy by increasing the quality and quantity of factors of production.

Externalities

Side effects of economic activities affecting third parties, can be positive or negative.

Free Trade

International trade without tariffs, quotas, or restrictions, leading to increased efficiency, consumer benefits, and economic growth.

Free-Trade Agreements (FTAs)

Treaties between countries to establish a free-trade area, promoting economic integration and attracting investment.

Globalization

Increased interconnectedness among countries, facilitating the movement of goods, services, and capital, with benefits and drawbacks.