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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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