Course Title:

Macroeconomics
Class BSAF, 4th Semester
Instructure
Dr. Haidar Farooqe
haidarfarooqe@numl.edu.pk
Lecture# 2
Faculty of Management Sciences,
National University of Modern Languages, Islamabad
 Topic

Objectives and instruments of Macroeconomics

 Objectives of Macroeconomics
• Price stability (low and positive inflation upto 2%)
• A sustainable growth rate of GDP (National Output)
• Falling unemployment and rising employment rate
• Higher average living standards (by rising national income per capita)
• Improved global competitiveness and trade balance (BOP)
• Equitable distribution of income and wealth
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• Balancing the budget and reducing the national debt
• Improving economic wellbeing
• Better regional balance
• Improved access to public services or public goods
• Improved competitiveness
• Environmental sustainability
 Price Stability
•Inflation is a rise in general price level
•Deflation is a decrease in general price level
•Too rapid inflation is harmful for many reasons (economic growth, economic
decisions, saving, investment, consumption)
•Inflation is generally controlled by the central bank
•Through monetary policy by higher interest rate and reducing money supply
•Through fiscal policy A higher rate of income tax could reduce spending's
•Supply side policies to increase competitiveness and efficiency
 A sustainable growth of GDP
• A sustainable growth means that the growth rate can be maintained
over the long term.
• Pakistan GDP growth rate situation
• 5.6 % GDP growth rate in year 2017-18
• 1.9 % GDP growth rate in year 2018-19
GDP Growth Rate of Pakistan
 Falling unemployment and rising employment rate
• Unemployment rate is the key economic variable or indicator
• The unemployment rate of a country represents the share of people
without a job in the country labor force
• Unemployment rate in Pakistan
• 3.79 % in 2016
• 3.95 % in 2017
• 4.08 % in 2018
• 4.45 % in 2019
 Higher average living standards (by rising
national income per capita)
• In 2018 GDP per capita of Pakistan was 1482 USD
• Bangladesh 1698 USD in year 2018
• India 2009 USD in year 2018
• According to the Human Development Index, is ranked 147th out of
170 countries
 Improved global competitiveness and trade balance (BOP)

• Lack of Planning in agro based exports

• Transportation problems
• Low skills development
• The legal processing problems
• Lack of research and development
Equitable distribution of income and wealth
• Equitable distribution of wealth and income is a global phenomena
• Pakistan is also one of the top of the list
• Only 22 persons in the country have billion of wealth
• Pakistan ranks 146 out 152 countries on spending on education,
health and social protection.
• Ranked 98 in progressive taxation.
• 26 % of population are living below the poverty line
 Other Macroeconomic objectives
• Balancing the budget and reducing the national debt
• Improving economic wellbeing
• Better regional balance
• Improved access to public services or public goods
• Improved competitiveness
• Environmental sustainability