Advisers - General

The aim of any Chancellor is to run the economy in the most stable way possible, and to achieve a high level of economic growth. High economic growth creates higher levels of income and therefore higher living standards for the people in the economy. This makes running the economy sound very simple, but, in practice, achieving high economic growth is fraught with problems. The Chancellor also has to be aware of all the other economic targets.

The four main economic targets are:

1. A high level of economic growth (growth in GDP)
2. A low level of unemployment
3. A low level of inflation
4. External balance (balance between exports and imports)

The main problem is that achieving one of these targets often means missing one of the others, as they often move in opposite directions. For example, a high level of economic growth will help improve living standards and create lots of jobs, but it may also cause inflation and attract a much higher level of imports. So you have hit two targets and missed two! This means that, in running the economy, the Chancellor faces 'trade-offs' between the different economic targets.

For more detail on how you can aim to achieve each of these targets in the Virtual Economy, follow the links below or at the foot of the page:

• Economic growth - improving living standards
• Low unemployment - keeping the dole queues down
• Low inflation - maintaining price stability
• External balance - competing against the rest of the world

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