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Principles And Application Of Macroeconomics Assignment Sample

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Introduction: Assessing UK Macroeconomic Indicators

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Principles And Application Of Macroeconomics

Macroeconomic policies in the UK are termed as evaluating the management of the nation with the support of significant steps which are applied for welfare. It focuses on correctly implementing the policies for developing the nation according to the requirement of the individuals. The prime variables of macroeconomic policies in the UK which are applied for the betterment of the nation are Balance of Payment (BOP), Economic Growth, Inflation and Rate of Unemployment. The concern of policymakers in the nation is implementing various kinds of rules and regulations in order to meet the need of the individuals in the economy. On the same side, the macroeconomic indicators in the economy are termed as showing the statistical data concerned with the specific county or region. Additionally, the growth rate of the nation depends upon the Gross Domestic Product (GDP), which are maintained for running the businesses and other management process for managing the development of the economy. Hence, it will be demonstrated adequately in the discussion.

The Balance of Payment is defined as the accurate difference between the total amount in terms of export which has been made by the developed country. Additionally, it includes the number of imports which are done by the nation. There are certain situations which develop in variant circumstances, such as if the export is greater than the import, it is considered to be surplus (X> M), and if the import is greater than the export, it is termed a deficit (X< M). According to the UK, the import of goods is greater than export which indicates that the nation runs under a trade deficit. Sources reveal that in 2021, the trade deficit was £29 billion. Therefore, the government of the concerned nation has to focus on increasing the rate of export in comparison to imports to increase the surplus of the nation. It makes the business in the economy vulnerable if the business is not making the proper amount of exports regarding effective goods and services. The UK economy withstands to be the Sixth largest economy with the Ninth rank in terms of GDP. Additionally, the purchasing power of the consumers is also in a stable position, with a per capita income of $42,558 according to global standards. The later part of the discussion will consist of relevant policies which are applied by the UK government policies and will be discussed appropriately.

"Macroeconomic Policy implemented for the welfare of the Economy."

The economy is considered the prime strength for managing the entire nation and keeping in mind the growth and development (Chami et al., 2021). It creates a lot of opportunities for managing the effective method in order to meet the need of the consumers in the economy. The businesses which are present in the economy contribute to increasing the GDP of the nation by expanding on the global platforms. It is one of the most effective methods which is applied for creating and building up a b economy in the nation. Additionally, the welfare of the economy depends upon the policies which have been implemented. Increased Balance of Payment in the nation will be able to create a more effective method for managing the economy in regards to creating effective circumstances. It focuses on reducing the Unemployment rate in order to increase the per capita income (Davidescu, Apostu and Paul, 2021). The consumers will be able to create the circumstances accordingly to the market situation. Additionally, keeping the inflation rate low and effective for individuals to expand their business in order to meet the expectation level of the consumers. It has been quite effective in managing with the intention of creating and enhancing the role of the government, including the big private players. It makes the business ber in the nation. Increasing the size of the workplace will contribute to reducing the employment rate in the economy. It makes the business sustainable in the long term in the competitive market. Thus, it is significant for the government to create more employment opportunities in the business environment (Henley, 2021).

The UK government focuses on providing independent monetary policy in the nation for solely handling the issues which are impacting the economy in general. Price stability in the nation is one of the most significant aspects which is taken into consideration for running the business in the economy. It makes the most of the businesses grow along with the policies which are implemented in the society for developing the change (Rawlings, Adcock and Wheeler, 2022).

(statista, 2022)

According to the graphical representation, which has been derived from the online website of Statista, states that the rate of inflation since the year 2021 has increased in the economy. It is not considered a relevant fact for managing the economy (statista, 2022). Therefore, the inflation rate has impacted the way of operating the business. This has impacted the way of taking a loan or conducting business. It can be seen that in February 2021, it was 0.4% and till it has increased to 6.2% in February 2022. It makes the business effectively vulnerable in regards to controlling the economic condition of the nation.

(statista, 2021)

Additionally, in regards to the unemployment rate, the UK nation has also suffered and has reached the level of 5% in the economy (statista, 2021). Due to the effect of the pandemic, the labour market, including other private sectors operating in the competitive market, has been impacted hardly. As the graph indicates that the unemployment rate increase is creating a great sense of alarm for the government and other big players present in the market. It can be analysed from the graph that the rate of unemployment in the mid of January 2020 was near about 4%, which drastically changed to 5% in the economy (Rogers et al., 2021). Therefore, the government of the concerned nation will have to take the initiative to decrease the rate of unemployment and create better scope for the individuals present in the nation.

The policies which are implemented in the economy such as monetary policy for low inflation,fiscal policy for taxation and Balance of Payment for increasing the value of the currency. Each and every mentioned policy in the economy is termed to be extremely significant for managing the need of the consumers (ons, 2021). It makes the businesses which are operating in the economy highly vulnerable if the policies which are stated are not implied in the economy properly. For illustration, the implementation of the policies in case of monetary, keeping the rate of inflation at minimum price flooring the consumers willing to avail loan from a financial institution, will be able to prevail loans. Accordingly, in this way, the consumers will be starting their businesses with the initial amount which has been taken will help increase the rate of GDP in the economy (ecb, 2021). The policies which are stated are said to be essential for managing the business with the intention of increasing the marketplace. This has created the objective of initially growing the economy with the contribution of uplifting the businesses and more employment opportunities. The employment condition of the economy states how far the nation can reach in case of developing the country with the help of the individuals contributing to making more effective opportunities.

The ongoing policies which are implied in the economy act as a boon in case of financial crisis or any form of necessity which might occur (ons, 2021 ). For instance, if these policies are not applied, the economy of the nation might have suffered a lot in case of increasing the employment and managing the businesses from consumers' viewpoint. Increased inflation in the market might highly impact the business, will fail drastically and will not be able to make effective opportunities for growth and expansion. The prices of the consumer's goods will increase, and the purchasing power of the consumers will decrease. Hence, the economy will not be able to flourish, and the deficit will increase in the economy. The consumer's demand will not be able to mitigate as the need of the consumers are impacted hardly. Additionally, the financial banks which are present will not be able to create and provide loans to the consumers as their power to pay the loan will not be stable in the economy. Moreover, the exchange rate in association with other countries will not be to create more opportunities in the economy. The nation will face a lot of depreciation according to the economic condition, and everything will be the measured condition. According to the statement of the President in the UK, inflation in the economy plays a significant role in controlling the way of entirely managing the businesses and other social activities. The Monetary Policy Committee (MPC) also plays an essential and crucial role in initially increasing the need of the business (bankofengland, 2022). Thus, from the discussion, the perspective of implying the policies in the economy is highly essential to the economy. Thus, the survival of the economy and the need of the consumers is highly impactful in making the most of the consumers served according to their required demand. Additionally, addition in the policies will be able to make the business more sustainable in the competitive market. Hence, if the policies are not applied, the economy will not be able to create more effective opportunities, and thus the citizens might have to face the issue of leaving the country in search of a better way of survival and higher living opportunity. Thus, the consumers in the economy will not be able to match steps with other developed nations.

The Bank of England is responsible for the implementation of the monetary and fiscal policies which are present in the economy (bankofengland, 2021). Alongside, the MPC members do have a significant role to play in order to enhance the decision making in the economy. Firstly, the implementation of the policies is suggested by the MPC members, and a meeting is held with the government of the nation to manage the business. Additionally, later the final decision is taken, the final decision which is taken with the contribution from the government and the MPC members is considered the final decision. Based on the policies which are suggested and implied into action in the competitive market will decide the status of the economy. Thus, it makes the business more effective, keeping in mind the need of the consumers and hence, it makes the business withstand the needs of the economy. The Bank rate is also fixed by the Bank of England for growing the business in the economy to create a perfect perspective from an economic viewpoint. For instance, if the businesses which are operating in the economy are able to generate a proper amount of profit margin in the economy, it will be able to increase the GDP and hence, the production possibilities will also increase. Additionally, the social sectors will get the opportunity in the competitive market more according to their needs. Thus, the social sectors will get proper recognition along with an economic perspective.

The policies which have been mentioned in the discussion are still implied in the economy for the welfare of the nation. It makes the business ber with the policies of monetary, fiscal and some other significant policies. The nation will be able to grow according to the perspective of increasing the business opportunity. Thus, the ongoing policies are extremely significant in order to meet the need of the business, which are increasing in the economy. For instance, the business will get the scope to take a loan with a lower inflation rate and expand their businesses in the economy from the economic perspective. Therefore, the policies in the economic environment are highly significant in the competitive market for mitigating the increasing demand in the economy. According to the current status of the economy, the Consumers Price Index (CPI) rose up to 9% in the economy. It can be quite impactful for the consumers purchasing the goods. Hence, it will increase the price of food products, and individuals will face problems in terms of purchasing the goods. As per the viewpoint of the economic experts in the competitive market, it has been recorded as the highest CPI which has been applied in the economy. It makes the business in the economy more vulnerable and rigorous for the consumers in order to meet their daily requirements. It decreases the opportunity for decreasing the need of the consumers need in the economy. Therefore, the ongoing monetary policy in the economy plays a significant role in the case of such initiatives (Butler, 2022).

(OCED, 2021)

The graphical histogram chart, which has been presented in the discussion above, states the increased rate of Consumer Price Index (CPI) in the UK economy till the year October 2021. It can be clearly analysed that the consumer's purchasing power in the economy has been highly impacted by the business (OCED, 2021). As per the graph which can be seen, the cost of electricity has increased drastically increased, and with the passing time, it has reached the level of a negative perspective. Among other mentioned items such as food products, fuel and some of the other products electricity is the one which has been impacted majorly. Thus, it is high time for the government of the nation to make certain effective decisions in order to meet the need of the consumers. It can be said that the power of purchasing the goods is getting hampered in the competitive market. Thus, the business will not be able to make the targeted profit margin in the economy. With the correct rate of CPI inflation, Bank Rate, and Inflation in the economy will be able to create more opportunities in the competitive market. Thus, it is important for the government in the nation to create the proper policies for the economy (ons, 2021).

(Lea, 2021)

The graph which is applied in the discussion shows the condition of Gross Domestic Product (GDP) in the competitive market of the UK. The first graph, which has been stated, identifies the fluctuating condition of the growth in the economy. It makes the business in the competitive market vulnerable in the case of GDP. On the other side, the economic indicators have also fluctuated in the economy (Lea, 2021). If analysing the graph based on GDP, it has shown that the growth rate in the economy has immensely fluctuated in the economy. It can be seen that the GDP has faced a negative lining in the business in the economy, and thus slowly and gradually, it has seen growth starting from the year 2013. It has been able to make the business in the economy more effective in the market condition as per the need of the consumers. On the other side, the indicators of the economy have also seen the same condition with the index number in the competitive market. It makes the business in the economy fluctuate as per the increasing and decreasing indicators.

The stakeholders of the nation, such as the government and big private players in the economy, have an immense role to play in the competitive market. Without their valuable contribution, the policies which are implanting in the economy for a decade could not have been possibly implemented. For ten years, the policies have changed the shape of the economy by successfully implementing the policies of monetary and fiscal including the exchange rate. The biggest strength of the policies which are applied with the prime intention of a stable economic situation. Hence, it has been successful in meeting the targets which have been set by the government and the other members. On the contrary, the weakness of the policies can be identified as in case of increased rates in the economy hampering the need of the consumers. There are certain challenges which still remain unchanged in the economy (Charef, 2022). The spread of the Wuhan virus has impacted economic stability, and the policymakers in the economy are still figuring out the possible method for meeting the need of the consumers. Additionally, the impact on the business is highly impacted in case of an increased inflation rate in the economy. Henceforth, the business has to suffer a lot in the economy. Therefore, the government of the UK have to come up with a proper method in order to meet the need of the consumers in the economy.


The Government of the UK is considered to take every possible step to meet the need of the economy. Despite making possible efforts, the economy faces a lot of issues in the case of managing the business of the economy. Therefore, it is highly recommended for the government of the nation to take steps to meet the need of the consumers in the economy. Keeping the rate of inflation and coming up with innovative policies in the economy will be able to create more scope. It will make the business effective if the government support the SMEs with the intention of growing in the deprived situation of the economy after the impact of the pandemic condition. Promoting businesses on the global platform will be able to create a ber implementation of the policies in the economy. Therefore, the rate of CPI will be accordingly to the expectation of the consumers present in the economy.


The discussion has concluded on the importance of policies which has been implanted by the UK government in the economy. It has evaluated the present condition of the economy along with the significance of monetary and fiscal policy. Additionally, for better clarity of the concept, practical illustration and graphical charts have been applied in the discussion above. The discussion has stated the policies for the welfare of the economy, including the citizens present in the economy. Hence, it has been evaluated that the ongoing policies in the economy have a better level of efficiency with the effective economic condition. The role played by the stakeholders in the economy. Likewise, the government and the private players have been demonstrated in the discussion. The appropriate recommendation has been provided for the government to improve the working condition and improve the condition of businesses which are present in the economy. It has also evaluated the challenges which have impacted the economy, and mitigation advice has also been jotted in the discussion.


Butler-Blondel, N., (2022). NIESR Monthly CPI Tracker-UK inflation in April surged to 9 per cent, marking the.

Chami, R., Espinoza, R. and Montiel, P.J. eds., (2021).Macroeconomic Policy in Fragile States. Oxford University Press.

Charef, R., (2022). Supporting construction stakeholders with the circular economy: A trans-scaler framework to understand the holistic approach.Cleaner Engineering and Technology, p.100454.

Davidescu, A.A., Apostu, S.A. and Paul, A., (2021). Comparative Analysis of Different Univariate Forecasting Methods in Modelling and Predicting the Romanian Unemployment Rate for the Period 2021–2022.Entropy,23(3), p.325.

Henley, A., (2021). The rise of self-employment in the UK: entrepreneurial transmission or declining job quality?.Cambridge Journal of Economics,45(3), pp.457-486.

Lea, R., (2021). GDP rose 0.4% in February and UK-EU goods trade part-recovered.Arbuthnot Banking Group,19.

Rawlings, L.J., Adcock, J. and Wheeler, S., (2022). Impact of vocational qualifications on young people's employment and labour market outcomes.

Rogers, H.A., Deutz, P. and Ramos, T.B., (2021). Repairing the circular economy: Public perception and participant profile of the repair economy in Hull, UK.Resources, Conservation and Recycling,168, p.105447.

bankofengland, (2021). Inflation calculator. [Online]

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ecb, (2021). Understanding and overcoming low inflation. [Online]

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ons, (2021). Balance of payments. [Online]

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