Macro-economic Objectives (AS/A LEVELS/IB/IAL)

Macro-economic Objectives (AS/A LEVELS/IB/IAL)

Courses Info

Level: AS Levels, A Level, GCSE – Exam Boards: Edexcel, AQA, OCR, WJEC, IB, Eduqas – Economics Revision Notes 

Macro-economic Objectives

The government of the day has key objectives it tries to achieve when in power.

The four main objectives are:

1. Economic Growth

Government must ensure growth is sustainable and not too high or low.

2. Reducing unemployment

This allows the AD curve to shift to the right causing an increase in the tax revenue paid to the government. This also lowers the social benefits the government would have to pay the unemployed.

3. Keeping inflation between 1-3%

Bank of England’s Monetary Policy Committee (MPC) tries achieving this target through the manipulation of interest rates and money supply.

4. Equilibrium on the balance of payments

Governments would like the inflow of money received from payments to equal the outflow of money payments made. Persistent deficits can lead to long term financial problems.

Other objectives

5. Greater distribution of income

Governments would like the income gap between the rich and poor to decrease over time. This is done through the redistribution of income by progressive taxation etc.

6. Protection of the environment

Governments would like to protect the environment we live in. This includes the lowering of pollution through measures introduced such as tradable pollution permits.


Quick Fire Quiz – Knowledge Check

1. Identify and explain five Macroeconomic Objectives (10 marks)


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