indicators- macro


Macro policy objectives

  • Inflation: To acheive economic growth
  • CPI: Work toward full employment
  • RPI: To limit inflation 
  • CPIH: Ensure a 'satisfactory' balance of payments 

All of the above are measures 

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Why is balance of payments an objective?

A satisfactory balance of payments is an objective because ideally the government doesn;t want the country to be importing more than it exports because that causes a defecit within the country. When the country is exporting more than its importing that creates a surplus.

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What is balance of payments?

Balance of payments measures currency flows in to and out of the economy in a particular time period (usually monthly, quaterly and yearly).

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What does the current account of balance of paymen

It shows the money value of exports (good and services) and the money value of the imports. Value of imports minus value of exports gives the balance of trade.

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Balance of payments

The balance of payments are split into two main sections: Current account and two other accounts. The two other accounts are Financial and Capital.

  • Trade in goods: -ve
  • Trade in services: +ve

The highlited creates the trade balance 

  • Income: +ve 
  • Transfers: -ve
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Other macro policy objecticves

  • Reducing budget defecit
  • Reducing national debt
  • Acheiving a more equitable distrubution of income
  • Acheiving a given exchange rate
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Policy conflicts

Price stability objectives come into conflict with the economic growth objectives and the full emloyment objectives. There are many others.

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Short run VS Long run

Short run- A few years into the future 

Long run- Many years into the future.

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