Objectives of Government Policy
Throughout this worksheet you will be asked to answer a number of questions;
you will find the answers on various websites. Go to
select “Economics”, “Edexcel”, “Unit 3” and then “Objectives of Government
Macroeconomic Policy - Worksheet”. Right click on any links and select “Open
in a new window” to view the web page.
What is Macroeconomics?
Macroeconomics is concerned with issues,
objectives and policies that affect the whole economy. Aggregate means the
sum of all individuals, therefore all economic analysis that refers to
aggregates is macro. The UK unemployment rate, the UK inflation rate, the
rate of economic growth in the UK; these are all UK aggregates and therefore
Are The Major Objectives Of Macroeconomic Policy?
and answer the following questions:
What are the four traditional major
Over the next few months we will look at:
how these objectives are
the relative importance
of these objectives;
how successful recent
governments have been in achieving these goals; and
the difficulties that
governments have in trying to achieve all the objectives at once.
What are the
Government’s present economic policy objectives?
Have a look at a
letter written by the Chancellor of the
Exchequer, Gordon Brown, to the Governor of the Bank of England, and
answer the following questions. This letter contains information about
the Government’s economic policy objectives.
The original letter can be found by clicking here.
Who is the present Governor of the Bank
Mervyn King who is the present Deputy
Governor of the Bank of England will take over as Governor at the end of
How often must the Chancellor of the
Exchequer specify what price stability (stable inflation) is taken to consist
of and the Government’s economic policy objectives to the Governor of the
Bank of England?
What is the inflation target (RPIX will be
covered in the coming weeks) for the coming year?
In addition to price stability, what are
the two other macroeconomic objectives of the Government?
What is the name of the committee that
decide upon the rate of interest?
What are the objectives of the Bank of
What range is the rate of inflation
allowed to fall within?
If the rate of inflation falls outside of
this range, the Governor of the Bank of England must write an open letter to
the Chancellor of the Exchequer. What information must be contained in this
When is the inflation target confirmed?
Which Objective was the
to answer the following questions.
objective was considered to be the most important after the 2nd
World War? How long did this objective continue to be at the front of
politicians' minds for?
objective was considered to be very important in the 1960s? Is it seen as an
important objective today? Why?
Why are growth and inflation important objectives?
How Successful Have Recent Governments Been In
Achieving These Goals?
What are strong periods of growth called?
What are periods of negative growth
All governments have a goal of eliminating
wildly changing economic cycles, i.e. they want continual, reasonable growth
that never ignites inflation. What level of growth would allow this to
At what level did inflation peak at during
Has inflation been stable over the past
When the economy has achieved “full
employment” does everybody have a job?
Use any websites you wish to find out the
latest figures on following economic statistics.
Rate of interest
Inflation (state which measure, e.g., RPI,
Growth (usually measured in % change in
Unemployment (figure and %)
Volume of exports
Volume of imports