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Economics IGCSEPDF 81
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○ Intervention is essential to prevent under-consumption and promote equity.
However, charging a small fee or allowing a mix of public and private providers
might improve efficiency while retaining broad access, offering a balance
between equity and efficiency.
4.2 The Macroeconomic Aims of Government
This section covers the key objectives a government pursues to manage the entire national
economy and the potential conflicts between these aims.
Effective Definitions
Economic Growth: An increase in the real
Gross Domestic Product (GDP)—the total
volume of goods and services produced—of
an economy over time.
Full Employment: A situation where all
people who are willing and able to work
are employed, with unemployment only
being frictional (short-term job searching).
Price Stability (Low Inflation): Maintaining
a low and stable rate of increase in the
general price level, which ensures the
purchasing power of money is largely
maintained.
Balance of Payments Stability
(Equilibrium):
Ensuring the total flow of
money from abroad (mainly exports) roughly
balances the total flow of money sent
abroad (mainly imports).
Redistribution of Income: The deliberate
reduction of income and wealth inequality
across the population through government
measures.
Environmental Sustainability: Ensuring
that current economic development and
resource use can be maintained over the
long term without causing irreversible
damage to the environment.