What is macroeconomics? Macroeconomics considers the performance of the economy as a whole.
Performance Indicators Economic Growth - GDP Unemployment Inflation Balance of payments
Economic Growth - trends in national output and living standards Defn.: Economic growth is the percentage increase in real national output in a given time period or a sustained increase in the productive potential of an economy.
Unemployment The Claimant Count The unemployed are those registered as able, available and willing to work at the going wage rate in any suitable job who cannot find employment.
Inflation Inflation measures the annual rate of change of the general price level in the economy. Inflation is a sustained increase in the average price level.
Balance of Payments The balance of payments is a record of all the financial dealings of the UK with the rest of the world. It can be split into two components The Current Account The Capital Account
The Current Account Again split in two Visible Trade »Invisible Trade
Trade in Goods (VISIBLE TRADE) Trade in goods includes: · Manufactured goods · Semi-finished · Components · Energy products · Raw materials · Consumer and capital goods
Trade in Services (INVISABLE TRADE) Trade in services includes: · Financial services, e.g., banking and insurance · Transport services, e.g., shipping and air travel · Tourism
Activity In groups, take 10 mins, what do you think the Governments Macroeconomic policy objectives are? Tip: think in terms of Economic Growth Unemployment, inflation & balance of Payments.
The Labour Government has several current objectives: Stable low inflation with prices rising at a rate within the target range of 1.5% - 2.5% per year Sustainable growth - as measured by the rate of growth of real Gross Domestic Product Higher levels of investment and productivity - to improve international competitiveness
High employment - the government wants to achieve full-employment (is this possible?) Rising living standards and a fall in relative poverty - Sound government finances (including control over government borrowing and the national debt)