Macro-economic objectives

• What does price stability mean?

  Keeping prices relatively constant over time
• What is a sign of economic growth in a factory?

  Producing more cars each year
• What are the effects of economic growth on standard of living?

  • Improves standard of living
  • Increases wealth for individuals
• What is the government's goal regarding unemployment?

  To achieve low unemployment
• What does economic growth mean?

  Producing more goods and services over time
• What does the Current Account track?

  Trade in goods and services
• What are the consequences of inflation?

  Reduces the value of money
• What are the two parts of the balance of payments?

  Current Account and Capital Account
• What is deflation?

  When prices fall too much
• What is included in one-time transfers in the Current Account?

  Foreign aid
• What does the Capital Account record?

  Investments flowing into and out of the country
• How does the government aim to create jobs?

  Through education and investment
• What types of income does the Current Account include?

  Wages from overseas workers
• How does economic growth affect people's wealth?

  It usually makes people wealthier
• What are the components of the Current Account?

  • Trade in goods and services
  • Income from overseas workers
  • One-time transfers (e.g., foreign aid)
• What does unemployment mean?

  People who want to work but can't find jobs
• What does a stable balance of payments indicate?

  Payments cover what is paid out
• How does price stability affect low unemployment?

  • Stable prices boost business confidence, leading to job creation.
  • Deflation can discourage hiring.
• How does price stability affect consumer confidence?

  It encourages people to buy things
• Why are consistent food prices important for families?

  They help families plan their budgets
• What is the relationship between economic growth and low unemployment?

  • Growth creates jobs, reducing unemployment.
  • Excessive growth can increase wages and inflation.
• How are economic growth and price stability interrelated?

  • Faster economic growth can lead to higher inflation.
  • Policies are needed to balance growth and price stability.
• What is the connection between stable balance of payments and economic growth?

  • Exports contribute to economic growth.
  • A stronger pound can hinder exports, slowing growth.
• What are the implications of a stable balance of payments for international trade?

  • Maintains trade relationships
  • Reduces reliance on borrowing
  • Supports economic stability
• Why is a stable balance of payments important for a country?

  It prevents significant deficits or surpluses
• Why must governments manage macroeconomic objectives carefully?

  To consider potential trade-offs for sustainable performance
• Why is high unemployment considered bad for individuals?

  It can lead to financial hardship and stress
• What are the four macroeconomic objectives?

  Economic growth, price stability, low unemployment, stable balance of payments
• How does high unemployment affect the economy?

  It reduces productivity and slows down growth
• How does a stable balance of payments affect a country's currency?

  It helps maintain currency stability
• What is the balance of payments?

  A record of financial transactions
• What can a country do to maintain a stable balance of payments?

  Avoid relying heavily on borrowing
• What are the consequences of high unemployment for individuals and the economy?

  • Individuals face financial hardship and stress
  • Economy experiences reduced productivity
  • Economic growth slows down
• What are the key aspects of price stability and its importance?

  • Price stability keeps prices constant over time
  • Prevents inflation and deflation
  • Essential for consumer confidence
  • Encourages spending and economic growth
  • Helps families plan budgets effectively