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The National and International Economy
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What is macroeconomics? Macroeconomics considers the performance of the economy as a whole.
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Performance Indicators Economic Growth - GDP Unemployment Inflation Balance of payments
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Economic Growth - trends in national output and living standards Defn.: Economic growth is the percentage increase in real national output in a given time period or a sustained increase in the productive potential of an economy.
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Unemployment The Claimant Count The unemployed are those registered as able, available and willing to work at the going wage rate in any suitable job who cannot find employment.
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Inflation Inflation measures the annual rate of change of the general price level in the economy. Inflation is a sustained increase in the average price level.
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Balance of Payments The balance of payments is a record of all the financial dealings of the UK with the rest of the world. It can be split into two components The Current Account The Capital Account
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The Current Account Again split in two Visible Trade »Invisible Trade
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Trade in Goods (VISIBLE TRADE) Trade in goods includes: · Manufactured goods · Semi-finished · Components · Energy products · Raw materials · Consumer and capital goods
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Trade in Services (INVISABLE TRADE) Trade in services includes: · Financial services, e.g., banking and insurance · Transport services, e.g., shipping and air travel · Tourism
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Activity In groups, take 10 mins, what do you think the Governments Macroeconomic policy objectives are? Tip: think in terms of Economic Growth Unemployment, inflation & balance of Payments.
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The Labour Government has several current objectives: Stable low inflation with prices rising at a rate within the target range of 1.5% - 2.5% per year Sustainable growth - as measured by the rate of growth of real Gross Domestic Product Higher levels of investment and productivity - to improve international competitiveness
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High employment - the government wants to achieve full-employment (is this possible?) Rising living standards and a fall in relative poverty - Sound government finances (including control over government borrowing and the national debt)
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