Economics Unit 2 Edexcel - Managing the UK economy Tuesday 19th May 2015 (PM)

This may sound stupid but i was just wondering, how exactly do you define macroeconomic objectives? Could you just say objectives that the government wishes to pursue?

This may sound stupid but i was just wondering, how exactly do you define macroeconomic objectives? Could you just say objectives that the government wishes to pursue?

Thank you! and yesss unit 1 was horrible

Glad it's not just me thinking this... Worst Unit 1 paper I've done by a country mile.

Any one done this question, Assess impact of UK government labour market policies on any thee macroeconomic objectives...

This was the 30 marker on my mock exam a few weeks back.

I wrote about economic growth, reducing unemployment and reducing the national debt.

One policy is to improve education and training, so productivity improves and leads to an outward shift in AS. This leads to an increase in GDP (one objective) and a decrease in inflation (another but I didn't write about it). This also satisfies the objective to reduce unemployment, as more people will have skills to be employable, which leads to lower unemployment.

However, initially it is very costly for the government. They will have to either borrow money (increasing national debt, contradicting one objective) or increase taxes. Increasing taxes could put people off working longer hours/more demanding jobs, so the fall in AS could counteract the increase that the training schemes provided.

Furthermore, in the short run the impact will not be noticeable, but in the long run it will, since it takes a long time to train people through education. Additionally, in the long run more people will be employed, thus more people are paying taxes, which means that the government get more money from tax revenue, so the national debt reduces. Similarly, when more are employed, less is spend on benefits, so this further reduces the national debt.


Government could also 'push' people towards working, by reducing the minimum wage and making means tests for IB more strict. This means supply increases as those who were claiming IB are now in work. This satisfies the aims of lower unemployment, and also helps reduce national debt due to the factors mentioned earlier (less spent on IB, more tax revenue).

However, in the short run when people aren't claiming IB they will not be taken into account by the CC, but they will with the ILO. This could skew unemployment data. In the short run, if IB is cut, then AD would decrease as income would be lower for those who previously had it. However in the long run it would increase as these people would find jobs (theoretically). This increase in AD satisfies the objective for economic growth.

Government could also make changes to taxation to improve national debt. This could however put people off working if they are getting taxes more on their income. They would contradict the objective of lowering unemployment. Furthermore, if people decide to claim job-seekers rather than work, government spends more on that, which could increase the national debt and counteract the effect that the taxes initially had.

I also spoke briefly about magnitude to grab an extra mark.

PS: Bloody hope you appreciate this BTW, spent about 20 minutes typing it out!

This may sound stupid but i was just wondering, how exactly do you define macroeconomic objectives? Could you just say objectives that the government wishes to pursue?

Objectives that the government wishes to fulfill, or get close to fulfilling annually. You would then state the 6 objectives.

Economic growth
restoring equilibrium on the balance of payments
Reducing unemployment
Reducing the budget deficit
stable prices (low inflation)

Good luck Lads and Ladies, im of to bed, at leasts its afternoon exam so plenty of time to go over notes in the morning.

Anyone want to give me some tips on how to make sophisticated brief conclusions for the evaluative questions? Particularly the 30 markers as I am usually constrained with time (didn't finish Unit 1 but wrote well enough to steal an A) and tend to want to avoid a conclusion as they aren't marked but are good to have for QWC.

Economic growth
restoring equilibrium on the balance of payments
Reducing unemployment
Reducing the budget deficit
stable prices (low inflation)

Economic growth
restoring equilibrium on the balance of payments
Reducing unemployment
Reducing the budget deficit
stable prices (low inflation)

My teacher told me that they are objectives that the government find most important to improve the economy as a whole, there are many objectives so i guess it will be hard to give it an overall definition.

This was the 30 marker on my mock exam a few weeks back.

I wrote about economic growth, reducing unemployment and reducing the national debt.

One policy is to improve education and training, so productivity improves and leads to an outward shift in AS. This leads to an increase in GDP (one objective) and a decrease in inflation (another but I didn't write about it). This also satisfies the objective to reduce unemployment, as more people will have skills to be employable, which leads to lower unemployment.

However, initially it is very costly for the government. They will have to either borrow money (increasing national debt, contradicting one objective) or increase taxes. Increasing taxes could put people off working longer hours/more demanding jobs, so the fall in AS could counteract the increase that the training schemes provided.

Furthermore, in the short run the impact will not be noticeable, but in the long run it will, since it takes a long time to train people through education. Additionally, in the long run more people will be employed, thus more people are paying taxes, which means that the government get more money from tax revenue, so the national debt reduces. Similarly, when more are employed, less is spend on benefits, so this further reduces the national debt.


Government could also 'push' people towards working, by reducing the minimum wage and making means tests for IB more strict. This means supply increases as those who were claiming IB are now in work. This satisfies the aims of lower unemployment, and also helps reduce national debt due to the factors mentioned earlier (less spent on IB, more tax revenue).

However, in the short run when people aren't claiming IB they will not be taken into account by the CC, but they will with the ILO. This could skew unemployment data. In the short run, if IB is cut, then AD would decrease as income would be lower for those who previously had it. However in the long run it would increase as these people would find jobs (theoretically). This increase in AD satisfies the objective for economic growth.

Government could also make changes to taxation to improve national debt. This could however put people off working if they are getting taxes more on their income. They would contradict the objective of lowering unemployment. Furthermore, if people decide to claim job-seekers rather than work, government spends more on that, which could increase the national debt and counteract the effect that the taxes initially had.

I also spoke briefly about magnitude to grab an extra mark.

PS: Bloody hope you appreciate this BTW, spent about 20 minutes typing it out!

Macroeconomic Objectives: Aims/Targets of governments to improve economic welfare.

Then it's the waffly ones lol, improving standards of living, improving equal distribution of income and wealth.

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Thanks so much for writing this out! Just a quick question, what exactly comes under 'Labour market policy'? Would that just be anything affecting consumers/households, and so would that include interest rates or not? Thanks

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