2. MACROECONOMIC OBJECTIVES
Low unemployment
Low and stable rate of inflation
Stable economic growth
Balance of payments equilibrium.
LET’S REVIEW

3. Economic Stability

4. STABILITY INSTABILITY NEW WORDS STABLE = Steady and balanced
UNSTABLE = Not secure and imbalanced
INSTABILITY

13. DEFINITION
Economic stability refers to an economy that experiences constant growth and low inflation. 
What are the advantages?

14. ADVANTAGES Economic Equity (in income distribution)
Advantages of having a stable economy include:
increased productivity
improved efficiencies
low unemployment. 
Low inflation
Better living standard (GDP per capita)
Economic Equity (in income distribution)
Good leadership (Government policy)

15. Signs of Instability Common signs of an instability are
extended time in a recession or crisis,
rising inflation, and
instability in currency exchange rates.
a decline in consumer confidence,
stunted economic growth, and
reduced international investments.

16. EXAMINING ECONOMIC STABILITY
Businesses cycles are commonly used to examine economic stability.
A business cycle is composed of a depression, recession, recovery, and peak stage. 

17. How do economic cycles affect economic stability?

18. D O W N S W I N G

19. ECONOMIC CYCLE RECESSION SYMPTOMS
A fall in purchases of raw materials
Rising unemployment and fewer job vacancies
A rise in the number of business failures
A decrease in consumer spending & a rise in income saved
A drop in the value of exports and imports of goods and services
Deep price discounts to sell excess stocks
Government tax revenues are falling and welfare spending is rising
The budget (fiscal) deficit is rising quickly
is a significant decline in economic activity spread across the economy, lasting more than a few months

20. RECOVERY
A recovery might follow a deliberate attempt to stimulate demand.
Cuts in interest rates 
A rise in government borrowing 
A policy of quantitative easing (QE) by the Bank in a bid to increase the supply of loans
A temporary cut in the rate of VAT or tax
consumer subsidy for households

21. BOOM
A fast growth of consumption 
Increase in the demand for capital goods 
Increase in businesses investment
More jobs and falling unemployment 
higher real wages for people in work
High demand for imports (trade deficit)
Government tax revenues will be rising
An increase in inflationary pressures
occurs when real national output is rising at a rate faster than the trend rate of growth.

23. Measures to achieve stability
Government spending
Taxes
Interest rates
Subsidies
Unemployment
Technology
Resources
How would each of these affect AD and AS
Can you think of any news events to show how these measures can be applied in practice?

24. What we try to avoid !!!!!!

25. Final thought!