Macro-economic objectives and circular flow

What are the macro-economic objectives

Growth - strong, sustained, sustainable

Unemployment - Low unemployment, full employment

Inflation - 2% and stable

Balance of payments - Balanced

Distribution of income - ‘Fair’

Budget deficit

What is meant by TIGERS

Trade

Inflation

Growth/ government budget

Employment

Redistribution of income

What are the non core objectives

Environmental sustainability

Productivity growth

Draw circular flow of income

What are the leakages of the circular flow

What are the injections into the circular flow

Tax, Imports, Saving

Government spending, investment, exports

What are the measures of GDP

Output method - The value of all goods and services produced in an economy in a year

Income method - Adding up all factor incomes earned in an economy (All wages, rent, profits.ect.

Expenditure method - All expenditure added up - G + I + C + (X - M)

All methods will get the same answer

How can the circular flow of income

Injections > Leakages - Economic growth increases

Injections < Leakages - Economic growth decreases

Injections = Leakages - No change to Economic growth

What is GNI

What is green GDP

Gross national income = GDP + (Income earned abroad by UK citizens - income earned domestically by foreign workers and firms)

Accounts for environmental costs of production Green GDP = GDP - Environmental costs