Macroeconomic Objectives of the UK Govenment Economic Policy Assignment

Macroeconomic Objectives of the UK Govenment Economic Policy - Assignment ExampleThis paper offers a comprehensive analysis of the frame start of macroeconomic policies of the government of the UK. In allege to exercise effective administration of the country the government must determine the objectives of its policy. Then the target has to be selected. The next task is to choose the instruments of policy to be used in pursuit of the objectives.Four major economic objectives, that any government should pursue, embarrass low unemployment level, price stability, satisfactory balance of payment fleck and sufficient sustainable economic growth. In addition to four major economic objectives a government may have other objectives for the economy. These may include a more even distribution income of wealth and a cleaner environment. It is difficult to achieve all four macro economic objectives at a time.Countries rarely experience perpetual economic growth. Instead they experience busin ess cycles. Periods of rapid economic growth are followed by periods of low growth or even a fall in output. Sometimes, these cycles can be the result of government policy of raising taxes in a recession in instal to compensate for falling tax revenues caused by lower incomes and expenditures. Unemployment fluctuates with business cycles. High employment has a number of significant advantages. Most people receive higher(prenominal) incomes from employment than from state benefits. Governments usually not aim for complete price stability but for low and stable rate of inflation. The government also is to train balance of payment equilibrium.... New classical economist refers to the non-accelerating rate of unemployment ( NAIRU). It can also be called the natural rate of unemployment. It is the rate of unemployment which exists when all those who want to work at the going wage rate and who have the appropriate skills can find a job (Storm & Naastepad 2012).. Whether it is example fo ur percent or 8 percent get out depend on a number of factors. These include the gap between paid employment and state benefit, attitudes towards living on benefits, cranch market information and skill levels. A government basing its policies on new classical theory would seek to reduce NAIRU by improving the working of the childbed market ( Top of Form Fabiani 1998). Bottom of Form . Furthermore, Governments usually not aim for complete price stability but for a low and stable rate of inflation. Complete price stability or zero inflation would mean that the general price level is not changing. In practice, in a dynamic, growing economy the general price the general price level is likely to rise by between 1% and 2% per year. This rise will reflect the buoyancy level of demand and the fact that the quality of goods tends to rise. For example, a television purchased in the year 2013 may be 5% more valuable than one purchased in 2012 but it may also, for instance, have extra chann els and give better reception. If the rate of inflation is equal to or below correspond countries, the countries can at least maintain its international price competitiveness. If it is stable then firms do not have to guess what wage claims they need to coerce to maintain their real wages. However, high and accelerating inflation is clearly undesirable. It can reduce a countrys international competitiveness, reduce the real income of some groups, make