Government Economic Objectives and Stability Notes

Economic Growth - This refers to an increase in a country's output of goods and services over time. - It is measured by app (Gross Domestic Product). - Governments aim for growth to improve living standards. - Governments aim for growth to create jobs.
Full Employment - The goal is to ensure that most people who are willing and able to work can find jobs. - It reduces poverty. - It increases income levels.
Price Stability - This means keeping inflation low and stable. - It helps people and businesses plan for the future without uncertainty.
Balance of Payment Stability - Governments aim to maintain a stable balance between exports and imports. - The purpose is to avoid large deficits or surpluses.

Definition of Inflation - Inflation is a continuous rise in the general price level of goods and services.
Impact on Businesses - Higher Costs: Raw material costs and wages may increase. - Uncertainty: Planning and investment become more difficult. - Reduced Purchasing Power: Customers may buy less. - Profit Impact: If costs rise faster than prices, profits fall.

Close Interconnection - Unemployment and economic stability are closely related via high and low unemployment states.
High Unemployment and Instability - High unemployment leads to economic instability. - Example: Low income leads to reduced spending and slower growth.
Low Unemployment and Stability - Low unemployment leads to more stability. - Example: People earn income, spend more, and support economic growth.
The Importance of Balance - Extremely low unemployment can sometimes lead to inflation. - Maintaining a balance is important.

Primary Objective - The objective is to increase national output and income over time.
Reasons why Economic Growth Matters - It improves living standards for the population. - It creates more job opportunities. - It increases government revenue through taxes. - It helps to reduce poverty.

Definition of Price Stability - Price stability means keeping inflation low and predictable.
Importance to the Economy - Protects Purchasing Power: Ensures that the value of money is maintained. - Encourages Saving and Investment: Provided by a stable economic environment. - Reduces Uncertainty: Minimizes volatility within the economy. - Long-term Planning: Helps businesses plan for the long-term.

Higher Income Levels - When more people are employed, people can spend more.
Economic Growth - Full employment leads to more production and increased demand.
Government Spending Reduction - There is less government spending required for unemployment benefits.
Better Living Standards - Overall living standards in the country improve.
Social Stability - Full employment results in less poverty. - Full employment results in less crime.