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Changes in principal macroeconomic variables over the course of a business cycle and the attempts of the government to control the fluctuations in pursuit of macroeconomic objectives

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  1. Introduction
  2. The four phases of business cycle
  3. The extent of Chinese growth
  4. The aims of the Government
  5. The monetary policy
  6. Demand side policies
  7. Conclusion
  8. Bibliography

An upturn takes place after a recession and is almost like the recovery stage after the slide. Inflation is at a low level and growth in GDP is beginning start again. Interest rates are low which means there is more borrowing in the economy which means more money for businesses to invest and a greater disposable income for consumers. Unemployment is still high but more jobs are becoming available, and there is a balance of payments surplus as exports are greater than imports due to the low rates of inflation making prices far more competitive against other countries.

[...] A reason to this could be due to the currency rates and the strength of the British pound, and as it gets stronger, other nations cannot afford British goods. The monetary policy is controlling the money supply in the economy. They do this through controlling and changing the interest rates. They increase rates to dampen the economy and decrease rates to boost it. The monetary policy meet once a month to decide on the interest rates and then the Bank of England set them. [...]

[...] Changes in government policies can also bring about a turning point in the cycle which leads onto the next question as to how governments attempt to control these changes in the cycle in pursuit of their macroeconomic objectives. The Government has 4 main aims which are to have low levels of unemployment, low and steady inflation, steady and sustainable growth and a positive balance of payments. They attempt to try and control these fluctuations in the macroeconomic variables by using the various tools available to them. [...]

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