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External Influences

The Macro-economy

The production and exchange process of the whole economy as opposed to individual markets within the economy. Businesses are affected by changes in the macro-economy and by government processes towards the macro-economy. Government economic policies change a lot. (E.g. labour made bank of England independent on their first day in office.)

Instead of dividing the economy into different sectors (e.g. retail, cars etc) we look at the economy of the country as a whole.

Government Macro-economic objectives:

• Control of inflation – 2.5%
• Maintain full employment-all who want a job can get one.
• Control of balance of payments. Imports vs. exports
• Stability of exchange rate. Could stabilise exchange rate by joining euro.
• Maintain steady economic growth -2%-2.5%. That means that the country as a whole does better next year than it does this year.

Inflation is a general rise in the price level over a period of time.......

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Approximate Word Count: 1010
Approximate Pages: 5 (250 words per double-spaced page)

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