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What are the current targets of macroeconomic policy in the UK and how can they be achieved?

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Introduction

Question 2 What are the current targets of macroeconomic policy in the UK and how can they be achieved? The United Kingdom is a highly developed country; it's the fifth largest economy in the world, and the third most populous country in Europe with a population of over 60 million people. The UK has a very sound macroeconomics system with four main objectives which helps sustain its status as a G8 member. The macroeconomic policy in the UK is influenced by two set of forces, the market by looking at supply and demand and those induced by government intervention. As a whole macroeconomic objectives in the UK are concerned with the overall performance of the economy. It relates to high economic growth, relatively stable price level and low and stable level of unemployment in addition the last goal is related to the balance of payments and the exchange rate may be distinguished, but it has no immediate or lasting advantage to the country of its payment position. ...read more.

Middle

stamps, more attractive than investments in real productive activities such as "hedges" for there saving, which keep pace with the general level of prices. Inflation at an unpredictable and variable rate, makes it difficult for businesses and private individuals to make any plans of investments with confidence for the future. Another real problem with inflation is that it brings real problems of the transfer of income, it favours people who are not on a fixed income. The way the government keeps inflation under control was by deflating domestic demand, the government in the early 1980's came up with a plan by gradually slowing down the monetary growth. Monetary Policy target for the annual inflation for consumer prices is 2% in the UK. The UK current employment system is split into two sections made up of people who are of working age and available to work, which does not include people in full-time education. All those people actually employed or self-employed make up the labour force with dependants making up the rest of the population. ...read more.

Conclusion

Fiscal policy can be used in many ways, taxes and subsidies can discourage spending on consumption or investments in times of excessive boom or to encourage spending when economic activity is low. The government can makes changes in the budget to vary tax rates in customs and excise duties in either direction by up to 10% without approval from parliament. The other way of influence total spending relates to the private sector but not the government itself, there is any reason why the state has to balance its on budget, the government can control spending by trying to reduce total demand. At times it's easier for central government to issue instructions for reduction of public spending than actually to reduce it. Cash limits for local authorities where introduce in 1976, which puts limits on the amount that can be spend in a year. The overall impact by the government's Fiscal policy in Britain has often been assumed to be adequately measured by changes in the PSBR. The policy is also affected by the relationship between government expenditure and tax rates. ...read more.

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Response to the question

This essay responds averagely to the task, looking at the main macroeconomic objectives. I do feel that this response is a bit jumbled, however. As a result, there isn't enough detail on the policies and how the mechanisms work. I ...

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Response to the question

This essay responds averagely to the task, looking at the main macroeconomic objectives. I do feel that this response is a bit jumbled, however. As a result, there isn't enough detail on the policies and how the mechanisms work. I liked how they were looking at whether these objectives were desirable, but this needed to be taken further and explored whether different groups and viewpoints see them as desirable. Such awareness and perception would've been strong analysis.

Level of analysis

The analysis in this essay is sound, but this is the area where most improvements can be made. Having read this essay, I cannot say that it shows a clear awareness of what the macroeconomic objectives are. This is because the essay doesn't have a sharp focus on the question. The discussion of inflation is basic and I would like concepts to be explored rather than asserted. For example "it favours people who are not on a fixed income" is perceptive, yet there is no mechanism explaining why this is the case. When looking at fiscal and monetary policies, it is vital to include an aggregate demand and supply diagram. Especially when looking at macroeconomics objectives, as it's so easy to show the effect on real GDP and the price level. Simple diagrammatical analysis will ensure you get the top marks. There is basic discussion of such policies, but again no focus on the question and this essay fails to draw upon how these policies affect the objectives.

Quality of writing

This essay is poorly structured. There needed to be an introduction which summarised the macroeconomic objectives, yet the introduction here just gives irrelevant background information. I would've structured the essay by looking at the macroeconomic objective, and why it is important, and then looked at policies to achieve this. Doing this for each objective would've made for a clear argument. However, this essay doesn't have clear signposts for the paragraphs, so it is hard to follow the line of argument. The syntax is poor in this essay. For example "The price stability which is the aim of macroeconomic policy is stability in the general level of prices, with its prevention or moderation of inflation." doesn't read well at all, and it's hard to award any marks for understanding. Spelling is fine.


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