Macroeconomic Performance Indicators

There are three main causes of increases and decreases of inflation
Inflation and Unemployment
Low Inflation
Inflation
One of the macroeconomic objective indicators is low inflation, and the government’s target is at 2.0% for consumer price index.
Inflation is a sustained rise in the price level, the percentage increase in the price level over a period of time.
Effects of Inflation
A certain negative effect of inflation would be that there would a decrease in value of money as every products price would increase, which would be due to either three different causes.
If inflation only occurs in one country e.g. United Kingdom alone, it would have disaster-ess effects on the country as it would lower price competitiveness in international markets as it would be effected on exchange rates because it would cause the pound to be too stronger than other currencies causing decreases in exports and probably increase in imports-consequently lowering Aggregate Demand.
Causes of inflation
There are three main causes of increases and decreases of inflation
One of the main causes of inflation rising can be described by a simple macroeconomic equilibrium diagram.

The diagram shows as AD increases it shifts to the right and it shifts on to the LRAS curve which steadily increases price levels with the same amount of real output causing inflation

Others Causes


Another cause of inflation would be because some products are imported and the prices are already set and so the rate of inflation would depend on the provider.
Example of Product - Petrol
Strikes and arguments between workers and employers could also cause inflation as well, because if workers want higher wages and employers agree, it would cost the employers more to make a product and so would increase prices to cover the costs and so again causing inflation.
Inflation trends

According to this table it shows that inflation rates are continuously increasing from 2000 to 2010 and this could be for many reasons which were said on the previous slides, but I believe this has mainly been due to products which are imported and sold and also to do with the introduction and regular increase of the minimum wage.
•Unemployment
Unemployment is when a person is out of work but are willing and still able to look for and do work.
Effects of Unemployment
There are many effects of unemployment, on the government, the unemployed person and on the whole country.
When people are out of work they are usually on benefits to resume a decent standard of life, but this costs the government millions of pounds each year which they cannot spend on other useful things.
•Causes of Unemployment
The state in which the economy can also be a result in unemployment as it would dictate how much consumers would demand a product and whether the economy is using all spare capacity.
Unemployment is mainly caused by the reduction of demand of certain products, as the product is demanded less, the company/business may decide to produce less or stop production all to together- which leaves workers who are now not needed and so made redundant.
Unemployment Figures

This graph above shows the trends and increase and decline in the unemployment rate between 2000 and 2010.
It is mainly showing that at the start of the decade, the unemployment rate was 6 but than dropped through to 2006 where it stayed fluxuating around the 5% mark.
Between 2007 and 2010 there have been sudden and steep increase e.g. straight from 5% to around 8%, which was caused by the ending of the recession, with cuts to businesses demands.