Five macroeconomic objectives governments seek to achieve

¶ … Macroeconomic Objectives

Briefly outline the five macroeconomic objectives governments generally seek to achieve

In each economy, the government always put forward some five macroeconomic objectives, which will help in keeping track of the economic growth. The five macroeconomic objectives are increase economic growth, control of inflation, reduction in unemployment, more equal distribution of income, protection of the environment.

Increase in economic growth

Increased economic growth acts as an agent for increased living standard which is always the aim of every government. The governments always seek in increasing the job creations to offer a source of income to the citizens. The government can only achieve this if it put forward strategies for increasing the economic growth. The increased economic growth has a direct relationship to the expansion of national production which acts as a prerequisite for economic development (Jonkhoff, 2011). The government also aim in increasing the national economic growth because the latter will increase the participation in international trade; consequently, increasing the diplomatic relationship with other countries.

3. Control of inflation

Control of inflation is significant as part of the government objectives in ensuring economic sustainability. Inflation always has a direct relationship to price instability as shown in Fig 1. The price index of the consumers varies all across the year 2010. The government will need to put much effort in ensuring that there is price stability in the UK. The government can only maintain the price stability only if there is as low inflation as possible in the nation (Langdana, 2009). Inflation always has impact in the creation of monetary policy since the former will lead to low currency value of the subject country in relation to its neighbors. Provided the UK has a higher inflation compared to the rest of the world, it is obvious that it will lose price competitiveness in the international market (Viertel, 2009).

Figure 1:

4. More equal distribution of income

Since the disparity in income distribution has always acted as a menace in the economic growth of the UK, equal distribution has been the last resort. Extreme income inequality always implies that most of the population are living under poverty and are can not care for their daily living. Unequal distribution of income makes the government imbalanced since the rich will always control the government to ensure that they protect their wealth. This is against the government policy of promoting growth in all the countries as it will make the poor to remain in their state. The UK government has put equal distribution of income to help in solving the issue. The graph shows that middle income has no place in the Britain income distribution.

5. Protection of the environment

Protecting the environment is part of achieving a sustainable development especially as stated in the Millennium Development Goals. To ensure sustainable development, the UK will need to put in place ways of reducing environmental pollution besides promoting sustainable consumption and production (Great Britain, 2006). This will help in breaking the relationship between economic growth and degradation of the environment. The government will also have to identify protection strategies to ensure there is sustainability in development.

Explain how the government policies to achieve one of the objectives influences the property in the UK

Increase in Economic Growth (real rises in GDP) and influence on Property

One of the greatest precedence of the government is to increase economic growth of the country. An increase in employment opportunities, education levels, and technological changes increase the productive capacity of the economy of United Kingdom. A productive economy would easily increase its output giving consumers more disposable income, which in the end increases their spending on consumption (Barras 2009). Increase in disposable income would provide resources for business enterprises to further investment. The government may also use the surpluses of economic output to provide public goods and services. Improved education creates workers that are more productive. Consumers in the UK should limit their spending on consumption and augment savings thus helping the country achieve higher level of GDP in the future (Barras 2009). Although economic growth is a long-term expansion of the production potential of the economy, the major concern should be sustained growth as it leads to higher real living standards and more employment opportunities. An increase in real gross domestic product (GDP) best explains growth of an economy (Barras 2009). As a government policy, sustained economic growth leads to the following benefits:

i. Employment effects: Economic growth stimulates higher employment. The UK economy has been growing steadily since autumn 1992 with the outcome being considerable fall in unemployment and increase in number of people securing employment. Rise in number of employment opportunities would reduce the level of crime in the end (Viertel 2009).

ii. Higher Standards of Living: The living standard is computable by increase in real national income per head of the entire UK population.

iii. Fiscal Dividend: Economic growth affects government finances positively. It will boost the level of tax revenues in addition to providing the government with extra money to use in funding various projects.

iv. Investment Accelerator Effect: Rise in demand as well as higher output level encourages investment in new capital machinery. This would sustain the economy in the end by increasing aggregate supply.

v. Growth and Business confidence: Substantial growth in economy would boost profits of many corporations, state-owned and private-owned, and business confidence. Small and large business entities would also record considerable progress owing to prevailing growth of the economy (Viertel 2009).

During the second quarter of 2012, the GDP of the United Kingdom contracted 0.7% over the previous quarter. GDP growth rate of UK has always averaged 0.6% between 1955 and 2012. However, the country reached an all time high of 5.3% in march, 1973 and a shocking record low of -2.5% in march of 1974 (Viertel 2009). Following the substantial growth UK economy recorded several decades ago, the country has emerged as one of the most developed economies globally. The Service sector, particularly insurance, banking, and business services, accounts for the largest proportion of GDP. Manufacturing industry continues to decline hence the economy hardly depend it for growth in United Kingdom's GDP. UK government has immensely reduced public ownership besides controlling growth of social welfare programs (Viertel 2009).

During the second quarter of 2012, the UK GDP decreased by 0.7% (Langdana 2009). Weaknesses in the construction sector and decline in output in the production and services sectors are responsible for poor performance during the second quarter of 2012. Construction sector suffered a massive decrease of 5.2% in Q2 (2012) compare with Q1 (2004). The service industry recorded a 0.1% decrease during the second quarter (Q2) of 2012.

United Kingdom is one of the overcrowded countries under the European Union and the world at large (Langdana 2009). Following increase in population, land has been subject to inexorable pressure. The relationships between land ownership, land use and population have become the centre of attention for planners in the wake of economic growth, which has led to migration of masses to towns and cities. The real estate sector has become vibrant. Property ownership among UK residents has equally gone up (Langdana 2009).