Economics Notes: Macroeconomic Objectives
1. Economic Growth
Increase in real GDP over time
Measured by % change in GDP
Benefits: higher incomes, better living standards
Risks: inflation, inequality, environmental damage
2. Low Unemployment
Unemployment: people able and willing to work but without jobs
Types:
oCyclical (due to lack of demand)
oStructural (industry decline)
oFrictional (between jobs)
Measured by unemployment rate
3. Price Stability (Low Inflation)
Inflation: sustained rise in general price level
Target: ~2% in many economies
Measured by CPI (Consumer Price Index)
4. Balance of Payments Stability
Focus on Current Account: exports - imports
Surplus = more exports
Deficit = more imports
5. Redistribution of Income
Reducing income inequality
Tools: progressive taxation, welfare benefits, public services
6. Environmental Sustainability
