Macro objectives

• • Macroeconomics: A branch of economics that deals with the performance, structure, and behavior of an economy as a whole, focusing on aggregate changes such as growth, inflation, and unemployment.
• • Macroeconomic Objectives: Broad goals that governments aim to achieve for the betterment of the economy, including economic growth, low unemployment, low and stable inflation, equitable distribution of income, and balance of payments stability.
• • Economic Growth: The increase in the amount of goods and services produced by an economy over time, typically measured by the growth rate of Gross Domestic Product (GDP).
• • Real GDP: Gross Domestic Product adjusted for inflation, providing a more accurate reflection of an economy’s size and growth over time.
• • GDP per capita: GDP divided by the population, indicating the average economic output per person.
• • Unemployment: Where individuals who are willing and able to work, who are actively seeking work, are of working age, but unable to find work
• • Frictional Unemployment: Short-term unemployment occurring when people are between jobs.
• • Structural Unemployment: Long-term unemployment resulting from industrial reorganization, typically due to technological change.
• • Cyclical Unemployment: Unemployment correlated with the business cycle, where unemployment rises during economic downturns.
• • Unemployment Rate: A measure calculated as: Unemployment Rate=(Number of UnemployedLabor Force)×100Unemployment Rate=(Labor ForceNumber of Unemployed​)×100
• • Inflation: The rate at which the general level of prices for goods and services rises, eroding purchasing power.
• • Consumer Price Index (CPI): A measure that tracks the average change in prices paid by consumers for a basket of goods and services.
• • Producer Price Index (PPI): A measure that tracks the average change in selling prices received by domestic producers for their output.
• • Demand-Pull Inflation: Inflation that occurs when aggregate demand exceeds aggregate supply.
• • Cost-Push Inflation: Inflation that results from an increase in the cost of production, leading to higher prices.
• • Built-In Inflation: Inflation linked to adaptive expectations, where past inflation rates influence future expectations.
• • Equitable Distribution of Income: A fair and just allocation of income across the population, aiming to reduce income inequality.
• • Gini Coefficient: A statistical measure of income inequality ranging from 0 (perfect equality) to 1 (perfect inequality).
• • Lorenz Curve: A graphical representation of income distribution.
• • Progressive Taxation: A tax system where higher income earners pay a larger percentage of their income in taxes.
• • Social Welfare Programs: Government programs that provide financial aid to individuals in need.
• • Minimum Wage Laws: Legislation ensuring that workers receive a minimum standard of pay.
• • Balance of Payments (BOP): A record of all economic transactions between residents of a country and the rest of the world.
• • Current Account: A component of the BOP that includes trade balance (exports minus imports), income from abroad, and current transfers.
• • Capital Account: A component of the BOP that records capital transfers and the acquisition/disposal of non-produced, non-financial assets.
• • Financial Account: A component of the BOP that records investment flows, such as direct investment, portfolio investment, and reserve assets.
• • Exchange Rate Policies: Adjustments in the exchange rate to influence trade balance.
• • Trade Policies: Measures to promote exports and control imports.
• • Fiscal and Monetary Policies: Government spending and interest rate adjustments to influence economic activity.