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PART A: THE BUSINESS ORGANISATION, ITS STAKEHOLDERS AND THE EXTERNAL ENVIRONMENT 
 
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(b) 
To control price inflation
(to achieve stable prices). This has become a central objective of UK 
economic policy in recent years. 
(c) 
To achieve full employment
. Full employment does not mean that everyone who wants a job has 
one all the time, but it does mean that unemployment levels are low, and involuntary 
unemployment is short term. 
(d) 
To achieve a balance between exports and imports
 
(on the country's balance of payments 
accounts) over a period of years. The wealth of a country relative to others, a country's 
creditworthiness as a borrower, and the goodwill between countries in international relations 
might all depend on the achievement of an external balance over time. 
The problem with trying to satisfy these objectives is that when any are satisfied, they invariably cause a 
problem with the others. For example, creating full employment may lead to increased inflation rates. As 
explained later in the chapter, governments use 'fiscal' or 'monetary' policies to manage these objectives.
8.1 Government spending 
Governments spend money. Expenditure must be allocated between departments and functions such as 
health, social services, education, transport, defence, grants to industry, and so on. 

Wages and salaries to employees 

Materials, supplies and services 

Capital 
equipment 

Interest on borrowings and repayments of capital 

Benefits and pensions to those entitled to such 
8.2 Significance of government tax and spending decisions to companies 
(a) 
Expenditure decisions by government affect 
suppliers to the Government
, such as producers of 
defence equipment, medicines and medical equipment, and school text books. 
(b) 
There is a