Essay on The effect of the macro-economy

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External Influences

The Macro-economy

The production and exchange process of the whole economy as opposed to individual markets within the economy. Businesses are affected by changes in the macro-economy and by government processes towards the macro-economy. Government economic policies change a lot. (E.g. labour made bank of England independent on their first day in office.)

Instead of dividing the economy into different sectors (e.g. retail, cars etc) we look at the economy of the country as a whole.

Government Macro-economic objectives:

•     Control of inflation – 2.5%
•     Maintain full employment-all who want a job can get one.
•     Control of
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Providing a service to other countries, e.g. leasing out ships to other countries, tourism) The bigger the gap between imports and exports the worse. Ideally exports should be higher than imports, but as Britain doesn’t make a great deal of things to export it could result in trouble. China will make more and more to export.

Full Employment

•     Full Employment- Used to be a job for all, now a job for all those who want one. Affected by economy-if economy is good, more jobs, if you are going through a recession then that is not the case. If you are over 21 the minimum wage is £4.85 for over 21’s, for under 18’s just £3.
•     The EU convention of Human rights, Article 23 states that everyone has the legal right to work. This means that if the person doees not have a job through no fault of their own, they must be compensated for. This is why must governments have a state system to provide for them.
•     In U.K there is a period of time where you get unemployment benefit linked to housing and family sizes. After an unemployment of 6 months, if you want to keep unemployment benefits you must sign up for training or education.
•     Full Employment differs from what it used to mean, it used to mean everyone should work but now it means what it says above.
•     The ‘Poverty Trap’ is where you get benefits,