Government and the Macroeconomy · 4 question types
Past paper frequency (2018 to 2024)
This topic accounts for approximately 13% of your exam marks.
Listing and defining macroeconomic aims, plus conflicts between them, appear on virtually every paper; usually 4 to 8 marks.
Macroeconomic aims are the objectives a government tries to achieve for the whole economy. They are the top-level targets that guide fiscal policy, monetary policy, and supply-side policy.
The syllabus focuses on six main aims. A government rarely achieves all six at once: pursuing one often makes another harder, which creates policy conflicts (covered in section 4).
The six aims:
Each is examined separately in sections 2 and 3, and they are tested together in conflict and benefit questions in sections 4 and 5.
Identifying a macroeconomic aim of government
What comes up: a multiple-choice question presents four options (e.g. "equilibrium prices in all markets", "high wages", "low inflation", "profit maximisation") and asks which one is a macroeconomic aim of government.
Write: the correct answer is always one of the six recognised aims: economic growth, low and stable inflation, low unemployment / full employment, balance-of-payments equilibrium, equitable distribution of income, or environmental sustainability. Things like "equilibrium prices in every market" or "profit maximisation" are microeconomic or firm-level goals, not macroeconomic government aims.
Watch out: "high wages" is not itself a government aim (it is a consequence of growth and full employment, not the aim). "Equilibrium prices in all markets" describes competitive market outcomes (microeconomics), not a macro government target.