Government Objectives
Business: Edexcel IGCSE, topic 1.6.1
Objectives of Government Economic Policy
Government macroeconomic policy can be used to achieve a range of objectives. Objectives are the goals of government policy. Governments try to achieve aims using instruments.
Sustainable economic growth
- Economic growth is defined as an increase in real GDP. That is an increase in the real value of goods and services produced in an economy in a given period of time.
Price stability
- Most governments aim to keep inflation, or the rate of increase in prices, low and stable.
Low unemployment
- Governments aim to have low unemployment.
Sustainable fiscal deficit and national debt
- A fiscal deficit is when a government spends more than it receives in tax revenue in a given time period.
- So, governments must borrow. Governments will aim to reduce this amount of borrowing.
Low income inequality and poverty
- Governments do not tend to have explicit targets for inequality and poverty but they do not want it to get too large.
Stable current account
- Although governments do not have explicit targets for the current account, they do try to improve their international competitiveness.