Macroeconomic Policy Objectives Essay Example | Topics and Well Written Essays - 1750 words

Macroeconomic Policy Objectives - Essay Example On the other hand, targets are defined as the intermediate aims closely linked to the objectives theoretically. Thus, for example, a government could set out to achieve low rates of inflation and, to achieve this; they could use interest rates as an instrument while the government could also set consumer credit growth as a target or exchange rates increment. The policies that can be used, by a government, to achieve macroeconomic policies are limited. Macroeconomics is the branch of economics that has to do with investment, national income, consumption, and other aggregates. Another definition is the study of entire systems of economics that aggregate over an economy’s working systems. It is concerned, basically, with systematic and predictable variables that are analyzable independently in relation to decisions of agents that are determinant of their levels. More specifically, macroeconomics can also be defined as the study of national economies with determination of national income. Macroeconomic Policy Low unemployment – Full employment A realistic nature of this objective is the one used by the ILO where they use young and unemployed people who are not always eligible to receive benefits, women who are in a marriage and cannot claim if spouses are not earning enough, and those claiming invalidity and sickness benefits (Marin 16). Most workers who feel inconvenienced often go for these benefits rather than swelling unemployment numbers. It is essential to take note of issues concerning inactive and active members of the country’s populace who have attained working age. Only those active individuals are included in the either working population that can be exemplified as all people who are registered as employed or unemployed. However, some individuals are in the unemployed category as a matter of decision, for instance, individuals opting for early retirement and students in school (Marin 16). Price Stability One can define inflation as the rise in prices at a general sustained level over a period. Inflation is technically a measure through annual Retail price Index, or RPI, which can also be referred to as the headline rate of inflation. To stabilize prices, governments need to keep inflation rates to a minimum (Marin 17). Governments normally prefer to keep the inflation rates to low percentages and mostly target rates of inflation that underlie the yearly percentage of RPIX. RPIX is the initial RPI before the removal of housing costs in the form of mortgage interest payments. Governments normally see sense in utilizing the measure because interest rates that are normally used as a control of inflation directly affect RPI. RPIY also acts as another popular inflation measure that does not include effects of indirect taxation like VAT and consumer price index used for international comparisons (Marin 17). Economic Growth This is measured using GDP change rate, also Gross Domestic product. The term real, as accompan ies majority of the statistics, normally refer to the fact that they have factored out inflation. Gross Domestic Product measures income, expenditure, or output of the economy of a country (Marin 19). A country, sometimes may also utilize GNP, or Gross National Product that is just like the GDP. Most governments publish figures of Gross Domestic Product on a quarterly basis that is based on the quarter on quarter change and annual percentages. Balance of Payment This briefly makes a record of all the money that streams into and out of the country. This can be further divided into financial and capital accounts, as well as the current account and capital accounts are referred to as the capital account (Marin 19). Normally, the current accou