The Government's Major Economic Objectives

The government's economic aims can be summarised under four distinct bullet points.

Economic Growth

We know that GDP (Gross Domestic Product) is the value of all the Goods and Services a country produces in a given time period. Therefore we ideally want this total value to increase. As a country produces more output there are more employment opportunities available to catalyse this growth.

Stable Prices (Controlled inflation)

Inflation is defined as the sustained rise in the general level of prices. As long as it is a positive figure, prices are increasing. If the rate decreases from say 3% to 2% prices are still rising but just at a slower rate. Stable prices would therefore have an inflation rate of zero. However it is  rare to maintain this figure. The UK Government's target is an inflation rate of 2% (Consumer Price Index). For more information please read the article on Inflation Here

Balance of Payments

Split into the current and financial accounts it measures the money going in and out of a country due to trade - importing and exporting goods. Therefore it is a measure of how the country is performing. Countries that are able to import cheap resources and raw materials in order to export high value goods tend to do the best. For example Germany import components and produce profitable Audis.

There can be either a current account trade surplus where exports > imports,
or a deficit where exports < imports.

A few things to remember about Trade Surplus and Deficit:

• The deficit is nothing to do with the National Debt. The Debt consists of the loans and credit terms it has agreed with other countries. It does not occur because the country is paying out more in imports then it is making in exports. 
• A Current Account Surplus isn't necessarily a good thing. The country may become too dependent on export markets and so rely on them for income. Hence if the world market collapses it will cause financial difficulties. Also it means that most of a country's output is shipped overseas. Hence there is less for people domestically. 

Employment

The government wants as many of the population (of working age) in employment. This means the country has a high employment rate and a low unemployment rate. People without a job are not growing the GDP of the country as they're not contributing to output. Also they use up the Government's budget in the form of Unemployment Benefit. Nor are they paying taxes which fund the government's ability to spend on projects. 

The International Labour Organisation Measure is used for comparison. This includes those who are married and don't need to work, those claiming disability allowances and those too young to be accepted for Job seeker's Allowance.

It is a better measure than the Claimant Count which is more out-dated which only takes into account those of working ability and age who are looking but cannot find employment.