Macroeconomics: Government Policy Objectives and Fiscal/Monetary Policies

MACROECONOMICS

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................4
Key government policy objectives..............................................................................................4
Fiscal or monetary policy contributing towards achievement of the policy objectives..............7
Advantages and disadvantages of the fiscal or monetary policy along with their effectiveness.9
Factors influencing the chances of policy objectives success...................................................10
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
There are various objectives of government policies such as stable low inflation, sustainable
growth improvements in productivity, high employment, rising living standards and a fall in
relative poverty, sound government finances and many more. The major two objectives of UK
macroeconomic policies are productivity improvement and high employment (Hantzsche and
et.al., 2021). Improvement in productivity is mainly designed for improving the competitiveness
and global trade performance. High employment objective deals in the ways in which
government supports increase in the employment which lead to a situation where all those who
are able and available can become able to find meaningful work (Macroeconomic objective and
macro stability, 2020).
The financial stability of UK became disturbed due to the Brexit and the pandemic of
COVID-19 which is why it is must to focus on the objectives of the government policies. The
productivity and the employment play a major role in enhancing or disturbing the economy of
the country because if the productivity of the companies is less then they will not be able to pay
the appropriate and sufficient taxes to the government and if the people become more employed,
this can help in filling the vacancies in the company with talented and skilled employees which
thereby increases the productivity of the organisation (Mason, 2020).
The monitory and fiscal policies in UK help in regulating the economic activity over the
time. These can also help in accelerating the growth when the economy begins to slow and also
helps in slowing or moderating the activity and growth when the economy begins to overheat
(Chand, 2021). Furthermore, the expansionary fiscal policies can be used for redistributing the
wealth and income. The government leaves the economic management to the Bank of England
and the monetary policies. On the other hand, the fiscal policy stabilisers play a major role to
moderate the economic cycle. In the case of recession, the government tends to receive lower tax
revenue and is likely to spend more on the unemployment benefits. The main goals of monetary
as well as fiscal policies are to maintain or achieve full employment, for stabilising prices and
wages and also to maintain or achieve high rate of economic growth (Thow and et.al., 2018).
This is how, it can b observed that the objectives of government policy and the monetary and
fiscal policies have the same goals which is why these policies help in achieving the above two
mentioned objectives of government policies.
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The report will shed light on the two government policy objectives and will also focus on
the monetary or fiscal policies which can help in achieving these objectives. The report will also
evaluate the merits and demerits of the monetary or fiscal policies and will also measure the
effectiveness of the same. The below section will also focus on the various other factors which
impacts the success of these policy objectives. Various recommendations will also be provided
for the achievement of these objectives of the governmental policies of UK.
MAIN BODY
Key government policy objectives
Economic stability is occurred when there is low volatility in the key indicators such as
prices, economic growth, jobs, investment, interest rates and trade. All the countries are likely to
experience and economic policy which helps in tracking the fluctuations in the rate of growth of
Gross domestic product of country. This can be experienced that some of the countries have
more volatile cycle than others (Jaelani, 2017).
Figure 1: Actual and Forecast Growth for the economy of UK
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