Macroeconomic Objectives

2174 WordsJul 2, 20139 Pages
Content Introduction----------------------------------------------------------------------------------2 Part one-------------------------------------------------------------------------------------2-3 AD=G+I+X-M--------------------------------------------------------------------------------2-3 Part two--------------------------------------------------------------------------------------4-5 Macroeconomic objective----------------------------------------------------------------4-5 Part three--------------------------------------------------------------------------------------5-7 Conflicts--------------------------------------------------------------------------------------5-7…show more content…
Net exports (NX, and sometimes (XM)), that is, the country 's output net demand around the world. In short, a country in a given period of time, aggregate demand (D or AD) = C + IP + G + (XM). These macrovariables is constructed for each of the different types of microvariables price, so these variables in monetary terms (actual or notional). This is the AD means in the economic. Part two Macroeconomic objective Low unemployment (full employment) It is important to keep unemployment levels as low as possible. High unemployment is expensive for the government and, therefore, for the taxpayer. For every unemployed person, there are two costs to the government. However There are other costs of unemployment. There is the cost to the whole economy in terms of wasted, unused resources. The existence of any idle resources means that the economy will be at a point within its production possibility frontier (PPF). Low inflation (Price stability) Some would say that the main reason why the control of inflation is so important is that if inflation gets out of control, the economy stops growing. If inflation rises, the Monetary Policy Committee (MPC) is forced to raise interest rates. Consumers will stop borrowing to spend and firms will stop borrowing to invest. The housing market will slump, and along with it all the home improvement consumption that goes with it. Manufacturers exports will become less competitive. The economy may well
Open Document