(A Level) Economic influences: macroeconomic objectives and policy

Learning objectives

Explain the macroeconomic objectives of low unemployment, low and stable inflation and economic growth, and how each phase of the business cycle changes demand, costs and investment plans.

Analyse how interest-rate changes made through monetary policy affect the cost of borrowing, consumer spending on credit and the viability of investment projects.

Analyse how fiscal policy — changes in direct taxes, indirect taxes and government spending — alters demand, costs and profits for different businesses.

Explain supply-side policies such as training, deregulation and labour-market reform and their effects on business costs and productivity.

Analyse how an appreciation or depreciation of the exchange rate, and government exchange-rate policy, affects importers, exporters and firms competing with imports.

Evaluate how a business should respond to a change in economic conditions or in government economic policy.