macro-economical objectives of the government

8/2/2019 Macro-Economical Objectives of the Government

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Macro-

economicobjectives ofthe

GovernmentBy Nehal and Tae Woo


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Something aboutmacro-economical objectives

These are aims set by the

government to improve or maintainthe economy of the country.

These aims will affect everythingfrom employment to interest rates.


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South Korea South Koreas

economy isfacing inflation

at themoment.

But how isinflation

caused?


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HighDemand

LowSupply

Inflation

Rise InPrices


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South Korea: Price StabilityAs of now, South Korea is putting its toppriority on price stability. South Koreangovernment is placing its policy focus onprice stability as both external and internalenvironments are unfavourable to containinflation.


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South Korea: Price Stability In terms of external conditions,

international oil prices have recently risenabove $100 per barrel with global raw

material prices staying higher.On the domestic side, if local firms

compete to raise their product prices,rising inflation could hurt people's

livelihood.


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The Bank of Korea unexpectedly raised itsbenchmark interest rate to 2.75%. This

would discourage people from borrowingand spending.

Interestrates rise

LoweringofDemand

Decreaseof inflation

How theyre trying to tackle

inflation


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How theyre trying to tackle

inflation

The Government will cut tariff on moreitems than the 67 planned for this yearand freeze public service charges,including on electricity and gas.

Items that will see a tariff cut include

coffee beans and powdered milk.


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More possible ways The government could increase taxes.

This would lower the payers disposableincome and therefore spend less.

The government could also control theamount of money being printed.Printing less money would mean less tospend.


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India: victim ofunemployment India as a nation is

faced with massive

problem ofunemployment.Unemployment canbe defined as a state

of worklessness fora man fit and willingto work.


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ProblemsThere is enormous increase in the

population. Every year India adds toher population afresh.

Technological advancementcontributes to economicdevelopment but The

computerization and automationhas led to technologicalunemployment.


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To make matters worseSince high rates of urban

unemployment would almost lead

to rising crime figures and violence.Today young people are not ready

to take jobs which are consideredto be socially degrading or lowly.

Unemployment is quite high in ruralIndia.


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Why achieve fullemployment?

Unemployment wastes resources.

High levels of unemployment iscostly to the government: taxrevenues fall and spendingincreases on the unemployed.


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Solutions to the crisis There is enormous

scope for raisingthe productivity of

Indian agriculture,doubling cropyields and farmincomes, and

generatingsignificant growth indemand for farmlabour.


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Solutions to the crisis Rising rural incomes

will have a masseffect, increasing

demand for farmproducts andservices, which willstimulate rapidgrowth ofemploymentopportunities in othersectors.


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More ways Introduce ways to

improve existingactivities that are

already growing rapidly,such as nursery schools,tutorial institutes, Englishlanguage teaching, etc.

so that more people willbe more educated andtherefore be productive.


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Conclusion

South Korea: Are trying to lower theirinflation rate but they should have a bit of

inflation, of course at a manageable rate. India: Is trying to achieve full employment

but their should be some unemploymentso that employers dont have to compete

to attract employees.


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Thank You

macro-economical objectives of the government

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