Macroeconomic Aims of the Government

Macroeconomic Aims/Goals may vary between countries to countries, but there are a few common goals all governments of any nation works towards for the economy: 

1. Economic Growth
2. Maintaining Price Stability
3. Decreasing Unemployment Rate
4. Exporting / Importing and loans from foreign countries
5. Redistribution of Income

• When economic growth is experienced, there are increases in the outputs in the short run - Actual Growth
• During the long run, when economies sustain its growth the potential of the economy's production must be increased
  • Increase in the economy's productive capacity for the long run. 

What are some determinants of Economic Growth?

• Supply Determinants 
  • Natural Resources
  • Capital Goods
  • Human Resources
  • Technology
• Demand Factor
• Efficiency Factor
• Criteria set by the Government: 
  • Level Of Output
    • In relation to its current max possible output and growth in productive capacity
  • Most got economies to be working at full capacities
    • Some set a target for economic growth rate

To understand the Macroeconomic Aims of the Government, we will also learn the various roles of the Government in the economy of a country:

Role of Government:

The Government's influence on local economy

• Some local areas are dependent on specific industries, and some of these industries are state-owned. 
  • Hence, the Government's decision regarding the wages and amount of production directly affect the local economy. 
• Government may subside the private sector industries to support them, or/and to prevent unemployment in their area. 

The Government as a producer

• Government produces products that are of high importance, or products produced by a natural monopoly. 
  • Essential products that should be provided to everyone that private sectors may under-produce. 

Public Sector and the Private Sector Partnerships

• Private sector firms provide a range of products for the public sector.
  • Government hospitals partners with private hospitals to battle diseases. E.g. Covid-19 and distribution of vaccines.
  • Construction of road, buildings, etc. 

Government as Employers

• The government employs workers and managers to control and operate its state owned enterprises. 
  • Helps to achieve its aims for the economy 
  • To reduce unemployment
  • To control rise in prices
    • Government limits wages rise on their workers and the price changed by enterprises.
  • Gives training to their workers
  • Pay them without any discrimination
  • Ensure pensions