We have already looked at demand-side policies, but governments also have the option to use supply-side policies. These are policies that are designed to increase the productive capacity of a country. As with demand-side policies there are two types: Interventionist policies and Market-based policies. It is important not just to understand the difference between these, …
We have now looked at the 5 different macroeconomic objectives of governments (low and stable inflation, low unemployment, stable economic growth, promoting equity and a favourable balance of payments), and the next step is to look at the government policies available to try and meet these objectives. The types of policies can be split into …
One of the issues that we have come across during our study of promoting equity as a macroeconomic goal is that of poverty. This is something that we will be looking at in more detail during the development economics section of the course in Year 13. At this point it is important to be able to …
We have already looked at the macroeconomic objective of promoting equity, why we have it and how we measure it. It is also important for us to look at the different measures we can use in order to promote equity. The areas we focus upon are the use of transfer payments and differing taxation systems. We …
A further macroeconomic objective that we study is greater equity in the distribution of the income. Remember that an equitable distribution of income refers to one which is ‘fair’, but that this is a very subjective or normative issue to measure and we therefore use equality as a proxy measure.
One of the government macroeconomic objectives we have already mentioned is stable economic growth. We have already looked at the business cycle and touched on issues relating to economic growth, but it is important that you understand what causes economic growth and the impacts (both positive and negative) that it can have.
Although governments have the objective of low inflation, it doesn’t necessarily follow that if inflation is bad then the opposite, deflation, is good. We have already looked at inflation and seen that it is a rise in the average level of prices in an economy over time; but we need to be careful to distinguish …
In the Macroeconomics section of the course the main model we are interested in is the Aggregate Demand (AD) and Aggregate Supply (AS) model. It is important that we understand not just what AS is and how to draw the curve, but what causes it to shift. As with Microeconomics we need to distinguish between …
In the Macroeconomics section of the course the main model we are interested in is the Aggregate Demand (AD) and Aggregate Supply (AS) model. It is important that we understand not just what AD is and how to draw the curve, but what causes it to shift. As with Microeconomics we need to distinguish between …
As well as studying inflation, it is important that we also study the reverse, i.e. deflation. It is important that we know about the causes and consequences of deflation so that we are able to evaluate which is worse inflation or deflation. Although some may think that because inflation is bad it must follow that …