Objectives Of Macroeconomic Policy Presentation
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Objectives Of Macroeconomic Policy Presentation Transcript:
1.Objectives of Macroeconomic Policy
2.Objectives
Full employment
Price stability
Economic growth
Balance of payments in equilibrium
3.Full employment or low unemployment
Those counted must be out of work, physically able to work and looking for it, and actually claiming benefit
international comparisons, the ILO (International Labour Organization) measure is used
Note the issue of active and inactive members of the population of working age
4.Price stability
Inflation is usually defined as a sustained rise in the general level of prices
measured as the annual rate of change of the Retail Price Index (RPI)
For prices to be stable, therefore, the inflation rate should be zero.
5.High economic growth
Economic growth tends to be measured in terms of the rate of change of real GDP
GDP is a measure of the annual output (or income, or expenditure) of an economy.
Growth figures are published quarterly, both in terms of the change quarter on quarter and as annual percentage changes.
6.Balance of Payments in equilibrium
Briefly, this records all flows of money into, and out of economy.
It is split into two: the Current Account and the Capital and Financial Accounts
the most important is the Current Account because this records -exports of goods and services relative to its imports
7.Which is the most important objective?
8.Conflicts between objectives
9.Internal balance-
state in which a country maintains full employment and price level stability.
Internal balance = Consumption [determined by disposable income] + Investment + Government Spending + Current Account (determined by the real exchange rate, disposable income of home country and disposable income of the foreign country).
10.External balance
condition in which the country's current account, its exports minus imports, is neither too far in surplus nor in deficit
External balance = the right amount of surplus or deficit in the current account
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Objectives Of Macroeconomic Policy Presentation Transcript:
1.Objectives of Macroeconomic Policy
2.Objectives
Full employment
Price stability
Economic growth
Balance of payments in equilibrium
3.Full employment or low unemployment
Those counted must be out of work, physically able to work and looking for it, and actually claiming benefit
international comparisons, the ILO (International Labour Organization) measure is used
Note the issue of active and inactive members of the population of working age
4.Price stability
Inflation is usually defined as a sustained rise in the general level of prices
measured as the annual rate of change of the Retail Price Index (RPI)
For prices to be stable, therefore, the inflation rate should be zero.
5.High economic growth
Economic growth tends to be measured in terms of the rate of change of real GDP
GDP is a measure of the annual output (or income, or expenditure) of an economy.
Growth figures are published quarterly, both in terms of the change quarter on quarter and as annual percentage changes.
6.Balance of Payments in equilibrium
Briefly, this records all flows of money into, and out of economy.
It is split into two: the Current Account and the Capital and Financial Accounts
the most important is the Current Account because this records -exports of goods and services relative to its imports
7.Which is the most important objective?
8.Conflicts between objectives
9.Internal balance-
state in which a country maintains full employment and price level stability.
Internal balance = Consumption [determined by disposable income] + Investment + Government Spending + Current Account (determined by the real exchange rate, disposable income of home country and disposable income of the foreign country).
10.External balance
condition in which the country's current account, its exports minus imports, is neither too far in surplus nor in deficit
External balance = the right amount of surplus or deficit in the current account
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