Macroeconomic Policies for Lowering Unemployment and Inflation Rates

Macroeconomics

Table oEf Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................4
Identify and analyse two or three macroeconomic policies the government uses to achieve
lower levels of Unemployment and lower inflation rates over the last 10 years........................4
CONCLUSION -...........................................................................................................................10
REFERENCES..............................................................................................................................12

INTRODUCTION
Macro-economics is the part of economics that studies the economy of a country as a
whole. The study of this branch includes the market that operates on a big scale. It is the study of
the large factors affecting the economy that have both positive and negative aspects on the
economy. These macro-economic factors consists of inflation, unemployment, demand, supply,
level of price, economic growth, national income, gross domestic product (Henao, 2020).
Macro-economics also handles with the performance, structure and behaviour of the economy
altogether. It helps in generating the models the explains the relationship between the different
factors. These models are termed as macro-economic policies which helps the government in
bringing sustainability and stabilization in the economy. These strategies helps the government
of a country to go global and to attract foreign investments.
The term macroeconomic policy refers to the scheme concerned with growth of the
economy. It is an action that a government takes to impact the economy as a whole. It studies the
operations and performance of the economy altogether. Macro-economic policies can be
implemented through fiscal policy and monetary policy. These policies are designed in a way so
that it helps in attaining the economic objectives of stability in price, full employment and
growth. The importance of macroeconomic policy is to bring stability and sustainability in an
economy. It reports the interconnections amid mass aggregates which is hard to understand like
overall price level, national income and savings. The significance of macro-economic policy is
that it centres on the big problems like unemployment, trade balance, inflation and
unemployment (Zlatinov, 2019).
The government uses fiscal policy and monetary policy to minimise unemployment and
inflation. The use of these policies to prevent unemployment and inflation is done through
stabilization in an economy. This stabilization is achieved by controlling the spending on public
budget government and tax collection to expand the output and employment. Government uses
both these policies together to manage economic activity, and put-back an economy to complete
employment result.
This report highlights the concept of macro-economic policy and different types of macro-
economic policies that a government implements to lower the levels of unemployment and lower
the inflation rates. With this, it also encompasses the advantages, disadvantages, and

effectiveness of these policies. This report also presents the key challenges that UK government
encounters to implement the different kind of policies.
MAIN BODY
Identify and analyse two or three macroeconomic policies the government uses to achieve lower
levels of Unemployment and lower inflation rates over the last 10 years.
The UK government uses the following macro-economic policies for the purpose of
preventing inflation and unemployment rate -
Fiscal Policy – Fiscal Policy can be defined as the decisions of government regarding spending
and taxation that needs to be improved for the economic growth. This policy is concerned with
generating the revenue through taxes and taking the decisions on what is the size of a
expenditure and designing the pattern for such expenditures. This policy is conducted by keeping
in mind the estimated budget where the government records its expenditure and income to ensure
a financial year (Fadul, 2021). The main objective of the UK government behind using this
policy is to allocate the financial resources efficiently, to control the inflation rate , to generate
employment, to bring price stabilization in the economy.
The UK government's fiscal targets that centres on-
Measures of Government Borrowings- It is the difference between what the government
has raised from the revenue and taxes
Measures of Government debt- In simple terms it can be termed as the loan taken or the
financial liability of a government to cover its budget deficit.
Monetary Policy- This policy includes the scheme where the monetary instruments are used by
the monetary authority to control and regulate the availability, costs and use of money to
promote the economic growth. Not only the money but it also regulates the credit for economic
growth. It is also concerned with proper regulation of demand and supply for money in an
economy. The objective of UK government behind using the monetary policy is to ensure the
credit flow to productive sectors, to create an efficient market for the government securities. The
Bank of England's Monetary policy committee sets this policy to 2% to meet the inflation rate.