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Level 1

Macroeconomic Objectives


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Low inflation
This is when the price level is kept relatively stable (increasing but at a low level) in order to provide macroeconomic stability.
Low unemployment
This is when the rate of joblessness is kept low.
Full employment
When everyone is employed, barring those who are unemployed due to frictional unemployment.
The natural rate of unemployment.
A controversial term, referring to the level of employment an economy can sustain any time, contingent on labour market 'frictions' i.e. unions, minimum wage etc.
Sustainable growth
Growth that can meet the needs of the current generation without jeopardising the potential economic livelihood of future generations.
Current account equilibrium
Ensuring the value of imports equates with the value of exports. Many would argue that an individual country should have the objective of a surplus of exports over imports instead of this objective.
Balanced budget
Aka fiscal balance. This is where taxes are equal to government spending. Not all economicst agree this is a good idea e.g. Keynes disagreed with the importance of this factor during a recession.
Redistribution of income
Many countries believe there are social problems associated with too great a gap between rich and poor and therefore one objective of government should be take from the rich and give to the poor e.g.
Economic growth
An increase in the amount of goods and services produced by a country. Many economist see this as the fundamental aim of economic policy.
Conflicts between objectives
This is where achieving different objectives at the same time proves problematic e.g. it is seen as difficult to achieve low unemployment and low inflation at the same time in certain economic context