macroeconomic objectives

• price stability 


  low rates of inflation (2-3% goal)

  infaltion adversaly affects spending power of households and firms
• full employment

  • when everyone who is willing and able to work can find paid employment
  • unrealistic to expect a ‘zero’ rate of employment as there is always frictional or structural unemployment
  • consistent with the natural rate of empoyment
• equitable distribution of income 


  • used to measure the extent which income in economy is equitable
  • all have equal opportunities to participate in economic activity and able to achieve a decent standard of living
• economic growth 


  • increase in productive capacity of economy
  • measured by change in productive capacity over time
  • measured by the GDP
• lorenz curve 


  maps the cumulative proportion of the population, ranked by income against the cumulative share of income

  • formula a/a+b

  
• phillips curve 


  indicates that there is a negative relationship between inflation and unemployment