Macroeconomic objectives

Steady rate of economic growth

Households are spending more and firms are producing more

Low and stable rate of unemployment

Most people have a job

Low and stable rate of inflation

Rate at which prices increase ; Bank of England’s target is +2%

Equitable distribution of income

Income is spread relatively equally

• Progressive tax system (increase in income = increase in tax)

• Relatively to effort / skill level

• Inheritance tax

• Benefits - Everyone can afford the basic necessities

Favourable balance of trade

One in which the value of domestic goods exported exceeds the value of foreign goods imported

Sustainable level of government debt

Able to pay back debt without compromising future generations - Gov. can still afford other public services (health, education)

Opportunity Cost

Refers to the cost of making an economic choice in terms of the next best alternative forgone