aqa AS economics unit 2
Unit Two
Managing the Economy AN INTRODUCTION TO MACROECONOMICS
The four main Economic Objectives in the UK are (in order):
Economic growth – Economic growth is an increase in the productive capacity of the economy. Measured by real GDP (Gross Domestic Product).
Price stability (low, stable rate of inflation) –If prices in an economy are constantly fluctuating/unstable, it creates uncertainty. Persistent or sustained increase in prices inflation. Gov therefore aim for a low and stable rate; in the UK the target is 2.0% and is measured by CPI (Consumer Price Index).
Low unemployment – gov aim to minimise the no. of people unemployed – if large amount, it means country is not using its labour resources efficiently e.g. producing inside PPF; measured by Claimant Count and the Labour Force Survey.
Balance of Payments – record of money into and out the economy. Current account measures the value of X-M of goods and services. UK has a deficit of current account (imports greater than exports) this more money flowing out than in the economy.
Other Economic Objectives:
Income Distribution – Lab party argue that large inequalities between rich and poor are unfair and need to be corrected e.g. introducing 50p tax. Can correct by redistributive methods such as higher levels of income tax levied on rich. The rev raised can then be redistributed to poor e.g. spending increased benefits.
The environment – consider environment when formulating economic policy e.g. most of world’s gov have signed to Kyoto Protocol, global agreement to cut down greenhouse gas emissions.
Types of Economy/Philosophy
Planned – Karl Marx – 1818-1883 – argued for state ownership of the means pf production to promote equality to income.
Mixed – John Maynard Keynes – 1883-1946 – argued that the gov should spend and tax more and have full employment.
Free Market – Milton Friedman – 1912 – 2006 – argued that gov should focus more on promoting price
Managing the Economy AN INTRODUCTION TO MACROECONOMICS
The four main Economic Objectives in the UK are (in order):
Economic growth – Economic growth is an increase in the productive capacity of the economy. Measured by real GDP (Gross Domestic Product).
Price stability (low, stable rate of inflation) –If prices in an economy are constantly fluctuating/unstable, it creates uncertainty. Persistent or sustained increase in prices inflation. Gov therefore aim for a low and stable rate; in the UK the target is 2.0% and is measured by CPI (Consumer Price Index).
Low unemployment – gov aim to minimise the no. of people unemployed – if large amount, it means country is not using its labour resources efficiently e.g. producing inside PPF; measured by Claimant Count and the Labour Force Survey.
Balance of Payments – record of money into and out the economy. Current account measures the value of X-M of goods and services. UK has a deficit of current account (imports greater than exports) this more money flowing out than in the economy.
Other Economic Objectives:
Income Distribution – Lab party argue that large inequalities between rich and poor are unfair and need to be corrected e.g. introducing 50p tax. Can correct by redistributive methods such as higher levels of income tax levied on rich. The rev raised can then be redistributed to poor e.g. spending increased benefits.
The environment – consider environment when formulating economic policy e.g. most of world’s gov have signed to Kyoto Protocol, global agreement to cut down greenhouse gas emissions.
Types of Economy/Philosophy
Planned – Karl Marx – 1818-1883 – argued for state ownership of the means pf production to promote equality to income.
Mixed – John Maynard Keynes – 1883-1946 – argued that the gov should spend and tax more and have full employment.
Free Market – Milton Friedman – 1912 – 2006 – argued that gov should focus more on promoting price