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Level 1

Economic Objectives of the Government


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Macro-economic objectives
The key objectives of government economic policy
Economic Growth
Growth in output of the economy over time
Real Economic Growth
Growth that is adjusted for inflation
Gross Domestic Product (GDP)
The total value of goods and services produced in the country in a year
GDP per capita
GDP divided by the total population - GDP per head
Investment
Spending on capital goods boosts growth
Full employment
When all those able and willing to work are in paid employment at the current wage
Unemployment
When workers who are able and willing to work are unable to find employment
Claimant Count
Measures unemployment according to the number of people claiming unemployment-related benefits
Jobseeker's Allowance
The main unemployment benefit
Labour Force Survey
A survey of a sample of households, counting people as unemployed if they are actively seeking work but do not have a job (in the week of the survey)
Voluntary unemployment
People choosing not to work
Seasonal unemployment
Workers not working at particular times of the year
Frictional unemployment
Workers moving between jobs
Structural unemployment
Industries that are in decline create job losses
Technological unemployment
Labour is replaced by capital
Cyclical unemployment
The is caused by a fall in total demand in the economy
Inflation
A sustained rise in the general price level over time
Price stability
The general level of prices is kept constant or grows at an acceptable rate over time
Rate of Inflation
The rate at which the general price level rises over time
Consumer Price Index (CPI)
The official measure of inflation in the UK
Monetary inflation
Inflation caused by growth in the economy's money supply
Demand-pull inflation
Inflation caused by excess demand in the economy
Cost-push inflation
Inflation caused by a rise in costs in the economy
Wage-price spiral
Where a price rise leads to a wage rise which leads to a price rise and so on
Hyperinflation
A rate of inflation so high that the value of money becomes close to worthless