MACROECONOMICS CLASS 2020

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macroeconomy

4.1 The role of the government

Local level

Has the authority to implement policies within the local geographical area

Undertake public activities

Collect taxes

Implement a local budget

The budget is spent on the welfare of the local area, providing different goods and services such as:

Public libraries

Internal roads

Housing

Public parks

Hospitals

Schools

National level

The public sector is an employer, producer and consumer in modern economies

Employer:

Main aim is to increase employment levels

The goverment employs workers, managers and executives to manage it administrative departments

The government can control price levels in the economy by implementing price controls and wages in the economy

Increase productivity by providing training and pension schemes

Producer:

Public services are provided by the government

These services are provided at a very low price

Industries that are in the public sector are called natural monopolies

the government can also own strategic industries that are important for economic development

Consumer:

To provide public goods the government demand goods and servies from the private sector

International level

Trade between countries is important for economic growth and economic development

Some countries have free-trade policies, having no restrictions on exports and imports

some countries place trade restriction in the form of tariffs and quotas

4.2 macroeconomic aims

low and stable rate of income

low rate of unemployment

Balance of payments

equitable distribution of income

Stable economic growth and increase in GDP

Economic growth refers to an increase in the real quantitiy of goods and services produced in an economy over a period of time, or an increase in real gross domestic product (GDP)

Every government aims to achieve sustainable, long term economic growth and increase the productive potential of the economy. When the quality and quantity of the factors of production increase, economic growth is achieved.

Economic growth on a PPC curve: An outward shift indicates long-term economic growth