The effect of the macro-economy Essays -- essays research papers

External InfluencesThe Macro- economic systemThe intersection and deputise process of the undivided parsimony as opposed to individual markets within the economy. Businesses are affected by changes in the macro-economy and by administration processes towards the macro-economy. Government economic policies change a lot. (E.g. labour made pious platitude of England independent on their first day in office.) Instead of dividing the economy into different sectors (e.g. retail, cars etc) we look at the economy of the country as a whole.Government Macro-economic objectivesControl of inflation 2.5%Maintain full employment-all who want a job can grow one. Control of balance of payments. Imports vs. exportsStability of exchange rate. Could stabilise exchange rate by joining euro. Maintain still economic product -2%-2.5%. That means that the country as a whole does better next year than it does this year. inflation is a world-wide rhytidectomy in the price level over a period o f time. Inflation in the late 70s in the U.K was 27%. That meant that if carbohydrate was 100p, the next year it would be 127p We can measure inflation byLooking at the standard retail price index. This is where the government agrees a standard shopping basket e.g. food, petrol, mortgage. RPIX-RPI take away mortgagesRPIY-RPIX takes away taxes and topical anesthetic authority taxes.HICP-adopted by all EU countries. This was made to try and mildew with the position is within Europe. They have decided not to include for example, housing be in each country, they are looking for a general price rise in general retail goods. However it is dear(predicate) in any city to live there, so housing costs are an extremely important factor. It does include university fees, to measure how good an economy is in any country. Because students are future of economy, the more students you can assign (theoretically) the better. Balance of paymentsA record of trade surrounded by U.K and other coun tries. (although it applies between all countries)It is the difference of imports and exports &... ... own country. Economic GrowthMeasured by the GDP (Gross Domestic Product) the value of fruit of goods and services in the economy over a period of a year. Measured by adding up total incomes (Y) or total expenditure (E0 or total output of industryIn theory all should be the same.Appropriate festering levels in U.K e.g. If it is too high, the economy is overheating, if it is too low it is stagnating resources, unemployed, an actual growth of 2-2.5% is seen as being sustainable and is appropriateIf growth rates get too high the economy is expanding too quickly and people glide by too much money which leads to an overheating of the economy and inflation. There is likewise a fear of whether it is sustainable to have it expanding that quickly. If it is too low resources whitethorn be unused/underused (e.g. labour) and this leads to unemployment. This is with low economic growth, no t a recession. The u.k economy has not hit the targets it wished, but was not shrinking like U.S.A and lacquer and Japan went into recession (2 quarters, or 6 months of a shrinking market.