Introduction to Macroeconomics

Four Main Economics Goals of an Economy:

1. Stable Rate of Economic Growth
2. Low Unemployment
3. Low & Stable Inflation (standard target of 2%-4%)
4. Satisfactory Balance of Payments

Other Pursuable Goals of an Economy:

1. Environmental Sustainability
2. Economic Equality

Growth:

• Commonly Measured by Gross Domestic Product (GDP)
• Measure the Output of the Economy (value)

Unemployment:

• Commonly Measured by Claimant Count & Labour Force Survey (ILO)
• “Those out of work, actively seeking work at the current wage rate”
• Labour Force Survey is thorough and usually reveals higher numbers of unemployment
• Claimant Count is problematic as not everyone is eligible for unemployment benefits

Inflation:

• Commonly Measured by the Price of a “Basket of Goods”
  • i.e. Consumer Price Index (CPI) or Retail Price Index (RPI)
  • Inflation: Increase in the Average Price Level of an Economy

Balance of Payments:

• Referring to the accounts of an economy, national scale balance sheet
• There are Credits which are considered as Injection (e.g. exports or factor earnings)
• There are Debits which are considered as Leakage (e.g. imports or factor payments)