Key Macroeconomic Objectives in the U.K

1) Low Inflation

The current U.K inflation target set by the Monetary Policy Committee is 2.0% (CPI)

2) Sustainable Growth

This is measured using GDP and refers to growth which keeps inflation low and reduces environmental damage.

3) High Employment

This indicates that all those willing and able to find work have the opportunities to do so.

4) Equilibirum on the balance of payments

Number of Exports = Number of Imports

Main Policy Instruments

There are three main policy intruments that can be manipulated to achieve macroeconomic objectives:

Fiscal Policy - Government spending, taxation and borrowing.

Monetary Policy - Interest Rates, exchange rates and supply of money.

Supply-side Policy - Aims to improve the productive capacity of the economy