macroeconomic objectives

• economic growth


  increase in the level output by a nation
• positive economic growth


  new technology, can increase production more reliable therefor higher output

  improved efficiency, resources may be used more efficiently like new production methods such as lean production which can increase output

  education and training, educated trainers are more efficient

  new resources, can allow us to produce more
• negative economic growth


  if economic growth is too fast it can go into overheat this can lead to inflation and negative externalities such as pollution and waste
• National Income


  value of income, output and expenditure over a period of time
• Gross Domestic Product (GDP)


  market value of all final goods and services produced in a country
• macroeconomic objectives


  redistribution of income, reducing unemployment, protect the environment, controlling inflation, economic growth, balance of payments
• economic cycle


  The Economic Cycle shows the fluctuations of economic output in a country and is measured by looking at changes in GDP from one quarter to the next.
• stages of economic cycles

  boom, peak of the cycle, GDP, employment and profits increase new firms enter the market.

  downturn, economy starts to grow at a slower rate demand stops increasing

  recession, temporary economic decline, economic activities are reduced

  recovery, GDP starts to rise again, businesses and consumers gain confidence, economic activity rises again
• impacts of economic growth

  employment, businesses will need more workers causing levels of employment to increase

  standards of living, increase in GDP so people will have more income increasing standards of living

  poverty, economic growth reduces poverty as it creates jobs

  productive potential, more jobs will be employed so greater productive potential

  inflation, if an economy grows to fast it may go into overheat which will cause inflation

  the environment, increases in economic growth may cause unsustainable growth as more non renewable resources will be used and more transporting will be used which contributes to the greenhouse effect
• unemployment


  when those who are actively seeking for a job are unable to find one
• Unemployment formula


  unemployed/labor force x 100
• How is unemployment measured?

  international labour organisational
• Cyclical or demand-deficient unemployment

  unemployment caused by falling demand as a result of a downturn in the economic cycle this is be cause when going into a downturn or recession businesses are more likely to lay off
• structural unemployment


  unemployment caused by changes in the structure of an economy such as the decline in an industry, there are 3 types:

  sectorial unemployment, type of industry is in decline

  technological unemployment, replaced by machinery

  regional unemployment, industries going into decline in different regions
• seasonal unemployment


  some types of workers are only required during certain times of the year
• voluntary unemployment


  unemployment resulting from people choosing not to work
• frictional unemployment


  when workers are unemployed for a short period of time as they move from on job to another
• impacts of unemployment output


  output, productive potential of a country will nit be fully utilised resulting in lower levels of national income and living standards unless people are replaced with technology then national income can actually increase.
• impacts of unemployment government spending on benefits

  people that are unemployed are entitled to financial benefits that need to be provided for by the state if unemployment levels increase more money needs to be allocated to the unemployment benefit this extra expenditure can incur an opportunity cost
• impacts of unemployment tax revenues

  if unemployment levels are high tax revenues will fall this can be bad as there would be less money to spend on public sectors or they might have to borrow which can increase national debt or they might have to increase tax rates
• impacts of unemployment business confidence

  when unemployment levels are high business confidence is likely to decrease this is because when firm lay off workers they need to give them redundancy money and businesses would be left with spare capacity there is also likely to be a fall in demand causing sales and revenue to drop especially firms that sell non-essential goods this contributes to the fall in confidence for businesses with can lead to them taking fewer risks, postpone projects and not make investments
• impacts of unemployment society

  if a large proportion of a community is unemployed the spirit in these communities may worsen, losing your job can also affect people psychologically, individuals may doubt their value which can lead to stress within relationships and divorce which can cause higher stress levels leading to poor health all of this could potentially lead to an increase in crime rates as their lack of necessities might cause them to turn to crimes
• balance of payments


  record of all transactions relating to international trade
• capital and financial accounts


  That part of the balance of payments account where flows of savings, investments and currency are recorded.
• current account


  part of the balance of payments where all exports and imports are recorded
• exports


  Goods and services sold overseas
• imports


  goods and services brought from overseas
• current account deficit


  when value of imports exceeds the value of exports
• Current balance


  difference between total exports and total imports
• visual pollution


  business activity that results in something physical that looks unattractive can have negative effect on peoples well being and living standards
• noise pollution


  excessive noise resulting from business activity that has a negative impact on the health of people
• air pollution


  emissions from factories and other business activities can pollute out atmosphere which can cause health problems for humans and animals
• water pollution


  contamination of water by waste matter or other material that is harmful to organisms that are exposed to the water
• government intervention to protect the environment: taxation

  This involves imposing taxes on activities or products that generate pollution or resource depletion. to internalize the external costs associated with these activities, encouraging businesses and individuals to reduce their environmental impact
• government intervention to protect the environment: subsidies

  the government can offer grants, tax allowances and other subsidies to firms that generate positive externalities as an incentive to reduce activities that damage the environment
• government intervention to protect the environment: regulation


  laws and legislation put in place to prohibit or avoid certain actions of a business.
• government intervention to protect the environment: fines


  The government use fines for those who break the laws this is common in many countries, many firms are responsive to financial penalties when imposed because it reduces their profits
• government intervention to protect the environment: pollution permits


  Governments can give pollution permits these allow businesses to discharge a certain amount of pollution these are tradable
• government intervention to protect the environment: park provision


  in many countries the government establishes national parks where business development and other commercial ventures are completely illegal. The parks aim to preserve and protect areas of outstanding natural beauty these parks restrict activities that can potentially cause damage upon the environment in that area
• absolute poverty


  where people do not have enough resources to meet all of their basic human needs