Macroeconomics is concerned with the study of the
behaviour and performance of the economy as a whole.
Government’s macroeconomic aims are concerned with the
improvement of the overall performance of the economy.
Some of them are:
Government’s macroeconomic aims
Economic growth
Economic growth is an increase in the production of goods
and services, that is the Gross Domestic Product (GDP), in an
economy in the given time period.
It an outward shift in the production possibilities curve that
results from an increase in resource supplies or quality or an
improvement in technology; an increase of real output (gross
domestic product).
Rate of economic growth increases with an increase in
quantity and quality of natural resources.
The reasons why governments aim for economic growth
include:
 to produce more goods and services
 to raise living standard of people
 to provide better nutrition, healthcare, education, etc.
 to provide employment
 to increase exports
Low unemployment
Governments aim for a situation where those who are able
and willing to have a job can get one, given that there will be
a certain amount of frictional, seasonal and structural
unemployment (referred to as the natural rate of
unemployment).
If the unemployed get work, they will increase spending, and
this will help to increase economic growth.
Increased employment means more spending in the economy
The reasons why governments aim for low unemployment
include:
 to increase income of people
 to increase tax revenue
 to reduce unemployment benefits
Price stability
It is when prices remain largely stable, and there is not rapid
inflation or deflation.
Price stability is not necessarily the same as zero inflation,
but instead steady levels of low-moderate inflation is often
regarded as ideal.
It is worth noting that prices of some goods and services
often fall as a result of productivity improvements during
periods of inflation, as inflation is only a measure
of general price levels.
Price stability ensures firm purchasing power of money
The reasons why governments aim for price stability include:
 to ensure confidence in the economy
 to make future financial plans
 to reduce hardships of poor people
 to maintain price competitiveness of domestic products
in international markets
Balance of payment stability
The balance of payments of a country is the difference
between all money flowing into the country in a particular
period of time (e.g., a quarter or a year) and the outflow of
money to the rest of the world.
These financial transactions are made by individuals, firms
and government bodies to compare receipts and payments
arising out of trade of goods and services.
Redistribution of income
Redistribution of income and wealth is the transfer of
income and wealth from some individuals to others by means
of a social mechanism such as taxation, charity, welfare,
public services, etc