Evaluating Macroeconomic Principles and Policy Applications in UK

This report provides an overview of macroeconomic principles and their application in the United Kingdom, focusing on the government's efforts to manage inflation and unemployment over the past decade. It discusses key macroeconomic indicators such as GDP, national income, and international trade, alongside the principles that underpin economic growth. The report examines the use of fiscal, monetary, and supply-side policies to control inflation, detailing specific measures taken by the UK government, such as adjusting government spending, taxation, and interest rates. Furthermore, it explores policies aimed at reducing unemployment, including skill development programs, career counseling seminars, and business funding initiatives. The report references historical data and current employment rates to assess the effectiveness of these policies in achieving macroeconomic stability and promoting economic growth in the UK. Desklib offers further resources and solved assignments for students studying economics.

PRINCIPLES AND
APPLICATIONS OF
MACROECONOMIC

Table of Contents
INTRODUCTION.................................................................................................................................3
PRINCIPLES AND APPLICATIONS OF MACROECONOMIC........................................................3
Explanations and analysis of the policies...........................................................................................6
Current or historic data......................................................................................................................8
Implementation of policy and theory.................................................................................................8
CONCLUSION.....................................................................................................................................9
REFERENCES....................................................................................................................................10
INTRODUCTION
Macroeconomic is branch of economy that study overall economy likewise, the
prevailing inflation rate, price, unemployment, output, disposable income of people and GDP
of particular country. It also helps in studying who well the economy is performing, the way
performance can be improved and the force that drive the economic. So, it can be stated that
macroeconomic generally deals with performance, behaviour and structure of entire economy

(Blanchard and Summers, 2017). Government is responsible for formulating effective
policies and procedure so that economy can easily grow and people have better place to live.
There are different set of policies that has been used by government of United Kingdom such
as sustainable growth, stable employment and prices.
In another words, it can be stated that macroeconomic focus on the way economy
perform and the way it analysis the different sector of economy are related to each other and
aggregate functions. Monetary and fiscal are two policies that are mainly used by the
government to reduce unemployment as monetary policy involves cutting of interest rates in
order to boost the aggregate demand (Dell'Ariccia, Rabanal. and Sandri, 2018). Thus, with
increase in demand of products and services, company will require to manufacture more
products thus it leads in having more employees to complete the task. At the same time fiscal
policy has also been used as government policy that is cutting of taxes in order to boost
overall aggregate demand and generate more employment.
This report has contained crucial information pertaining to Macroeconomic of United
Kingdom and the manner in which the government macroeconomic policy has contributed in
achievement of both lower level of unemployment and rates of inflation during the last 10
years. Relevant fact and figure will be used in the report to present key information related to
the way policies has successfully contributed in generating more employment opportunities
for people and reducing the inflation rates.
PRINCIPLES AND APPLICATIONS OF MACROECONOMIC
Principles of macroeconomic can be stated as effects of business cycle on wider
economy and what cause an economy to grow over a long period of time. Such as national
income explain about the gross national products, net national income and gross domestic
products. So, its main purpose is to paint healthy financial health of nation. International
trade also looks over the manner in which products and services will be trade in different
countries. In addition to this a higher economic output contribute in generating more income
through generating more employment and tax revenue (Grant, 2017). So, all these are basic
principle and applications of macroeconomic that has been study in the report to gathered
sufficient detailed pertaining to macroeconomic of United Kingdom.
Inflation
The inflation is being defined as the constant rise in the general price level of the
goods and services of common and daily use. This involves general products like the food,
transport, fuel, clothing and many other different common factors (Darling, 2020). This

involves the environment wherein there is a general rise in the prices of the particular goods
and services within a particular economy. A high inflation is not good for the country as if the
prices will be high then consumer will not be buy the product or the service. The inflation can
also be referred to as the inflation is decrease in the purchasing power of the currency. This
simply means that the general level of price has increased and with that every monetary unit
can buy some fewer goods and services. Thus, for the effective working of the country it is
very essential for the government of the country to manage all the price level so that
consumer continuously buy the product. This is pertaining to the fact that cost of living of the
consumer is totally dependent over the prices of the goods and services.
Policies and theories related with inflation
Hence, with the above discussion it is clear that the use of the different
macroeconomic policy is very important for the government to manage the inflation. This is
particularly because of the reason that inflation will not be good for the country and this will
reduce the income of the country. Thus, for this the major policies which were used by UK
government for managing the inflation are as follows-
Fiscal policy- this is the policy which is related to making changes within the
expenditure of government and the taxation. The government expenditure involves the public
expenditure and the taxation as well which are being undertaken on the national and local
level. In addition to this, the government of country also spend money on a variety of the
aspect like retirement, disabled people, health care, defence and many others.
Monetary policy- the monetary policy on the other hand is defined as the making
changes within the supply of money in the economy (Chugunov, Pasichnyi and Nepytaliuk,
2019). The monetary policy involves making changes involving the money only and not any
other aspect. These monetary policy involves the making changes in the money supply,
interest rates, exchange rate and many others.
Supply side policy- these are the types of policies wherein the changes and decisions
relating to the aggregate supply is being undertaken. This is particularly because of the reason
that the inflation can be managed with help of controlling the supply of the goods and
services. This can be managed by way of increasing or decreasing the supply of the goods
and services.
Data relating to inflation

With the above evaluation of the graph it is clear that the inflation was fluctuating and
sometimes it was higher and sometimes it declined. Hence, this clearly depicted the fact that
the government of UK was effective in managing the inflation. This can be said because of
the reason that the even though the inflation was high but it was not too high and in low also
it was not too low.
Application of policies in solving inflation
All the three different policies were effectively used by government in order to
manage the inflation in proper and effective manner. The management of the inflation is very
important for the reason that this will provide a better working condition to the country and
the economy will develop. Hence, the strategies used by UK government as follows-
Under the fiscal policy, the UK government tighten the fiscal policy by way of
reducing their own spending. In addition to this, under the fiscal policy also the government
has increased the taxes (Ascari, Florio and Gobbi, 2020). This is particularly because of the
reason that when the taxes will be high then the people will have to pay for high taxes and
this will reduce the spending power of the consumers. Thus, the people will not be in position
to buy the high priced products. Hence, as a result of this high price the demand will decrease
and as demand will fall the inflation will also decrease.

Further under the monetary policy reform the government of UK has undertook the
decision of increasing the interest rates. This was done with the intention of reducing the
consumer and the investment spending of the consumers (Barnett and et.al., 2020). This is
helpful in controlling the inflation as if the consumer spending power will be low then they
will not buy the goods and services. Thus, this will result in decrease in the demand and as a
result of this the prices of the goods and services will be controlled. In addition to this higher
interest rate will also result in people taking less loans for their personal needs and due to this
inflation will be controlled and managed by the government of the country.
Along with these two macroeconomic policies, the supply side policy was also very
helpful to the government of UK in managing the inflation in proper and effective manner.
This is pertaining to the fact that the inflation is caused by high prices and in that case the
government can increase the supply of the goods and services. This is pertaining to the fact
that when there will be increase in productivity, competition and innovation then the prices
will automatically be decreased. Hence, as a result of this inflation will be controlled and be
managed at lowest.
With this it can be stated that the use of the macroeconomic policies is very important
in managing the inflation of the country (Ashrafganjoee and et.al., 2021). This is pertaining to
the fact that when these policies will be applied in proper and effective manner then this will
improve the income of the economy and the operational efficiency of the economy as well.
Explanations and analysis of the policies
Unemployment is an issue that is all about the eligible people not able to find the right
suitable jobs on the basis of the needs and requirements of the respective stakeholder. The
policy of the government is to fundamentally analyse the overall needs and requirements of
the stakeholders. The unemployment has always been an issue for the business organisation
and this is essential for the entity to critically evaluate the overall operational and functional
areas. The various policies government in United Kingdom has issued in order to deal with
the unemployment.
Skill developed policies
Government in United Kingdom has been focused towards the enhancement of the
skill and individual potential ability of the human resources and employees part of the
country. The role of the skill development campaign is very significant in favour to the

government in country. Under this policy government has focused towards channelizing the
skill development campaigns for the graduates and the experienced professionals. This would
certainly favour the professionals and graduates to approach the skill improvement campaign
and career growth related campaign in a very significant way or manner (Loopstra and et.al.,
2018). This practice is very significant as it provided a significant boost in the individual
working ability as a professional to deliver the best level of growth and development
possibilities. This can be stated as a practice that certainly indicated the professionals to
approach better career development and growth oriented opportunities. Skill development
practice is one of the key practices that certainly favour and empower the professionals and
the individual to approach the career development and growth in the best way possible.
Career counselling seminars
This is another key step that is taken by the government in United Kingdom for
approaching the career development and growth oriented possibilities. This is a step taken by
the government in which the career counselling seminars are launched so that professionals
can take a proper guidance over the individual growth and development of the career
possibilities of the respective professionals. Career counselling seminars are the one the
certainly empower the professionals to direct and take a strategic advice in respect to boost
up the career growth and development like opportunities.
Business funding and start up funding policy
In order to deal with the unemployment government in United Kingdom has launched
a policy where the funding is allocated to the professionals. This is a fund that professionals
and graduates can use against the business ideas or the start up idea (Adams-Prassl and et.al.,
2020). This is an important policy making that allow the government to overcome the
unemployment rate at some level. This could also support the government in cutting down
the unemployment rate in country.
The above projected policies launched by the government to certainly empower the
citizens and professionals to overcome the unemployment like policies. The policy making of
government is only about to minimise the overall unemployment rate by creating more
employment opportunities.

Current or historic data
All different policies and strategies government has formulated has favoured in
overcoming or cutting down the unemployment rate in United Kingdom. In the current
situation the employment arte or percentage in United Kingdom has been projected as 75%.
The unemployment rate is currently deal at a rate of 4.7% (Chang, 2020). This statistic
clearly reflect that in United Kingdom people and professionals are not facing issues n
regards to approaching employment and the career growth oriented opportunities. This is a
part of the government policy making where the government has tried to overcome the
unemployment rate of country. The funding practices deliver by the government has also
significantly boosted the start up growth rate that is by 3.1% (Carlin and Soskice, 2018). This
is a part of the policy making of the government where it has targeted the unemployment with
support of start growth and development possibilities by motivating the professionals to start
the own business idea. This is an important direction and policy making of the government
that certainly empower the government to deal with the constant raise of unemployment in
country. This has been very significant for the government to approach the unemployment
condition in a more strategic manner than to approach it in a different manner. All the policy
making and efforts put by the government could work positively in favour to overcome the
issue of unemployment in economy.
Implementation of policy and theory
Every policy making require the bet level of strategic implementation by the
government. This is important for the government to effectively implement the policy rather
than giving emphasis to only the formation of the policy in country. Unemployment is an
issue that fundamentally allow the professionals and the graduates to mitigate the
employment related need and requirements. This is essential for the government to promote
its policies in a best way possible. Social media can be the biggest platform that can play
crucial role in promotion of the policies formulate by the government (Ordóñez, Monfor and
Cuestas, 2019). This is significant for the government to reach with the actual stakeholder
associated with the policy in order to approach the bets level of success against the policy
making. This is necessary for the government to approach the policies in a best way possible
so that best level of success could been approach by the government. This is fundamentally
essential for the government to approach the respective graduates and professional at a
personal level with support of right technique of promotion and other such approaches to
make a strategic success of the policy making and strategic direction. This is important for

the policy implementation practice to approach the policy in such manner that best level of
results could be generated by the government against the policy making. All these are the
significant ways to reach a success against the policy making.
CONCLUSION
From the above report, there are several crucial information that can be summarized so that
study related to success of government macroeconomic policies in terms of reducing
unemployment rates and rate of inflation can be made useful. Macroeconomic is study of
whole economy so that necessary strategies, steps or policies can be planned by government
to improve the same for maximum benefits. Furthermore, it can be stated that policy has
helped in ensuring sufficient employment opportunities in society or United Kingdom so that
people have disposable income to live better lifestyles. Unemployment and inflation are two
important concepts of macroeconomic as if the people have sufficient employment so that
they can easily live their life. Therefore, it can be stated that policies helps in regulating the
economy and contribute in providing employment and reducing the inflation rates in United
Kingdom.
There are different policies that are made by government at various stage so that
unemployment and inflation can be reduced to maximum extend for benefits of economy as
well as society. Supply side and demand side are method that has been used to decrease the
unemployment ratio in UK. Likewise, in supply side, the government have tried to remove
the labour market regulation so that they have flexibility to move and get employment
opportunities to have good source of income. Employment subsidies is another way that has
been used by the government to reduce the long term unemployment in the society. Thereby
it helps company in recruiting or having more and more employees to enjoy the subsidies
through employing the different individual. The education and training is provided to
employees or individual pertaining to the way task need to be completed so that they have
sufficient skills to do the same. Thus, it helps in having highly talented and qualified
employees that are dedicated and determined to work for benefits of company.

REFERENCES
Books and Journals
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and Foreign Trade Variables on Income Distribution among Income Deciles.
Quarterly Journal of Quantitative Economics.
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macroeconomics.
Blanchard, O. and Summers, L., 2017. Rethinking stabilization policy: Back to the
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