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Macroeconomics

Powerful Essays
Introduction

Macroeconomics is worried about the economy as a whole, such as output and growth that measures the total income of the economy in goods and services and inflation which the percentage increases yearly in the price of goods and services. Employment is also included which is all about the changes in the labour market. The objective of the UK’s government is to achieve stability of growth and employment. This is for the UK to build a strong economic future. The government aims to raise the rates of encouraging growth and achieve rising success by creating economic opportunities for the public.

1.1 Explain the purpose of a selection of indicators of national economic behaviour which are Economic growth, Unemployment, Inflation and Balance of Payment.

Economic growth

Economic growth is the most basic indicator of an economy's health which is the rate at which national income is growing. Economic growth is a rise in what an economy can produce if it is using all its scarce resources. A combination of two goods that can be produced in a country when the available resources are fully and efficiently utilized is called production possibility frontier (PPF). An increase in an economy’s productive potential can be shown by an outward shift in the economy’s PPF. The easiest way to show economic growth is to combine all goods into consumer and capital goods. A shift to the right of a PPF means that an economy has raised its volume to produce.

PPF

Unemployment

Unemployment is a big problem in this society, because it constitutes the waste of resources. There is a possible chance that it leads to poverty for those who are out of work. High unemployment is a pointer of bad national economic performance, vice versa...

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...A current account deficit can be the reason of an industry, or a whole sector of the economy, that goes into refusal. Over the last 30 years the UK economy has reindustrialized. Man made goods that were formerly created domestically are now imported from abroad. The rise in the quantity of man made goods imported has hard-pressed the UK’s current account towards deficit.

External shocks

An external shock that is past a country’s control can have deep collision on that country’s current account. For example, the UK is now a net importer of oil because North Sea oil raw materials are fading. The demand for oil is price inelastic because it has little alternatives. If the supply of oil from the Middle East is interrupted then even a moderately little adjustment in the oil price would roughly definitely move forward the UK’s Current Account further into deficit.
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