Report to Currently Macroeconomic Policy in Australia
The aim of this report was to analyse the currently macroeconomic policies being applied in Australia, and the impacts on economic growth, unemployment, inflation and trade these four fundamental issues in macroeconomic management. The survey involved researching data on the policy target number of economic growth, unemployment, inflation and trade from the government statistics and Reserve bank of Australia database. And analysing the issues from past, current and future aspects. From the research, the macroeconomic policy is widely used by Australia government to adjust and control the economy. With the analysing of the economic trend and target accomplishment, it is recommended that the Australia government or the central bank should wisely use a various types of macroeconomic policy, such as fiscal policy, monetary policy, foreign exchange rate policy and distributive policy to keep the Australian economy stable.
Table of content:
Current policies and target 5
Reference list 11
There are various policies in Australia conducting the macroeconomics including Fiscal and Monetary policies and so on. This report is going to discuss these macroeconomic policies been used in Australia and the effect of current economy. Both these policies are used by Australia government and central bank to smooth out the business cycle through altering aggregate demand. For the purpose of recovering from the recession, expansionary monetary policies were implemented in Australia in order to the reduction in aggregate demand. Meanwhile Reserve Bank of Australia increased liquidity through multiple purchases of government bonds, which led to a decrease in interest rate. However, whether these policies had effect on reducing the recession in long-term, we need to consider from the perspective of inflation, economic growth, unemployment and trade (Sloman, Norris & Garratt 2010 P.293).
1.1 Current macroeconomic policy
As the influence of global financial crisis, in order to recover from the current financial condition, Australia has conducted a various types of macroeconomic policies to stimulate the economy. Currently, the deficit reflects Australian low national saving and inadequate investment return. Due to reduce the depth of the recession, the Australia government adopted a massive expansionary fiscal policy to enhance domestic savings and to control government public debt, which can remove the inflationary gap and achieve a stable economic growth (Bernanke 2007). Meanwhile, the Reserve Bank of Australia implemented an aggressive monetary policy to purchase multiple of government bonds, which resulting in a decrease in interest rate.
1.2 Current target
GDP: As the Australian economy started to turn its attention away from trade with the Western markets to trade within the Asia Pacific region in these years, Australia has become one of the fastest growing advanced economies in the world at this moment. According to the results of research, the target of GDP is going to increase 2.9% in 2012 (Economy watch 2012). Inflation: And both the Governor and the Treasurer have agreed that the appropriate target for inflation is to achieve the rate of 2–3%, on average, over the cycle, by using the monetary policy. (Reserve Bank of Australia 2012) Unemployment: According to Australian Treasurer and Deputy Prime Minister, Wayne Swan, the budget is expected to create 500,000 jobs in two years and is aimed at bringing unemployment rates down to 4.5 percent, which is...
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