Economics Macroeconomic Policies Hillsdale Essay

2885 words - 12 pages

Discuss the use of fiscal and monetary policy.
Market economy’s major issue is that the rate of economic growth varies from year to year, following economic cycle of boom and bust. Furthermore, the operation of market forces can create inequitable and unfavourable outcomes. Governments play an important role in stabilising the economy, sustaining economic growth, and changing economic outcomes, which in the long run results in higher levels of growth and improved living standards. Policies designed to smooth such fluctuations are called macroeconomic policies, and the two macroeconomic policies implemented within Australia are fiscal policy and monetary policy.
Fiscal policy is a minor macroeconomic (countercyclical) policy that is utilised by the Australian government to achieve their economic objectives. This includes stabilising economic activity, influencing resource allocation and redistributing income, as well as reducing the level of inflation and unemployment within the economy. In this manner, fiscal policy is able to address areas of market failure, especially market instability, wherein there are severe fluctuations in the level of economic growth that distort economic decision-making, reduce consumers’ purchasing power, and force an increase in interest rates.
A QUOTE OR TWO
The main instrument used by the government in order to implement fiscal policy is the Commonwealth Government’s Budget. The Budget is released in May as an annual statement, and delineates the government’s planned expenditure (G) and revenue (T) for the next financial year. Revenue received by the government includes direct tax (of which progressive income tax makes up almost 70% of revenue) and indirect tax (such as GST, which applies at a flat rate of 10% to items sold), The other sphere of the instrument is government expenditure, which encompasses social security (the biggest outlay – transfer payments from taxpayers to welfare recipients), health, education, infrastructure, and other forms of transfer payments such as unemployment benefits. The Federal Government announced $444 billion revenue to be made and $464 billion in expenditure for the 2017/18 financial year, with their statement in May indicating only a small change in net government spending over the next financial year ending June 2019.
The budget outcome gives an indication of the overall impact of fiscal policy upon the economy. Possible outcomes include a surplus (T > G) and a deficit (G > T). As of the 2018/19 Budget statement released in May, the government has stated they are undertaking a relatively contractionary stance within their decreased budget deficit to $14.5 billion (0.8% of GDP) greater expenditure than revenue, comparing to the 2017-18 Budget with a deficit of $29.4 billion (1.6% of GDP). Given that the main fiscal policy aim is to achieve budget surpluses when the Australian government has recorded a series of budget deficits since the GFC, it is evident the government is working...

Other Essays On Economics - Macroeconomic policies - Hillsdale - Essay

Bugs life economics questions and answers - renni/ economics - essay

1434 words - 6 pages Economics Focus The film A Bug's Life runs the gamut of basic Economic considerations. These first questions deal with Macroeconomic issues. All answers require an assertion with justification. 1. At the start of the movie, what are the resources of Ant Island? What resource do they lack most of all? What changes in the Ants' resources do we see through the film? Are the Grasshoppers entrepreneurial talent or are they just annoying? 2. Is Ant

economic intervention and armed conflict - E&D - Research paper

3269 words - 14 pages The Economics of War: how economic intervention sows the seed for armed conflicts “The culture of death is imposed by economic and political interests, the arrogance of power, corruption. I blame the first world for having taken our riches for so many years. I am speaking of the superpowers that dominate the life of the world. More concretely, the World Bank, the IMF. Those that have caused and tolerated the death of our people, those

Mercantilist Economic Theory And Policy, Interconnected With Wider Political Issues

1016 words - 5 pages introvertedsociety or set of policies.This short essay will examine the ways in which Mercantilist economic theory andpolicy were interconnected with wider political issues.Mercantilist foreign and economic policies shared one common goal, growththrough territorial expansion. From the early voyages of Columbus and Vasco de Gama, to John Cabot and England's subsequent claim to the new world, Mercantilist theory would dictate that through the

Progressivism In the 19th Century - AP US History - Essay

1332 words - 6 pages society as humanly possible. To do so, they believed that the government must evolve to best fit the environment at hand. Progressivism resulted from the Industrial Revolution’s Laissez Faire economics and Social Darwinism which had morphed the government into a corrupt hierarchy. At the time, the nation needed a president that would make policies to protect these people that were insignificant and powerless. What resulted were a line of progressive

Foreign Direct Investment In China And Worldwide

3902 words - 16 pages utilise bank loans to finance private equity buyouts, essentially exposing the private equity funds to substantial vulnerability to the global macroeconomic environment, such as a sharp increase in interest rates.Sector AnalysisBy sector, in 2005 the primary sector has increased in importance in contrast to the declining trend in the manufacturing and services industry. The growth of the primary sector has been fuelled chiefly by the strength of

Deregulation was the main cause of the 2008 financial crisis. - UCC, banking law - essay

1933 words - 8 pages higher than normal rate in the late 2007, and on September 15,2008, one of the biggest investment banks in the world, failed, Lehman Brothers (2008financialcrisis.umwblogs.org, 2018). Financial innovations and deregulation during the “Great Moderation” allowed bankers the opportunity to increase their return on investment with the use of various mechanisms. The purpose of this essay is to explore the causes of the 2008 Financial Crisis and support

goverment policies and development, NDP AND Sustainable development - university of johneesburg - essay

3381 words - 14 pages by all means to eliminate pollution and depletion of resources. There are policies created to achieve the goals of sustainable development, however this essay has firstly defined the key terms to be used , the essay gave clarity on sustainable developments, the essay all discussed the five (5) millennium development goals and five (5) sustainable development goals and lastly the essay has discussed the National Development Plan and including its

Development Of Veitnam's Economy

3569 words - 15 pages government in Vietnam attempted to gain an "isolationalist" approach to economics, it has continually veered towards an economically integrated market on the global stage[2].2.0: Development of economical policy structureIn the early years the economy was guided by a five-year development plan that corresponded to the Soviet and Eastern European planning cycle. During the 1970's emphasis moved from heavy industry to agriculture and light

Negative Gearing in Australia's Housing Sytem - Queensland University of Technology - Essay

2199 words - 9 pages SWB108 Australian Society, Systems and Policies Assessment Task 2 Essay The Role of Negative Gearing in Australia’s Housing System Name: Brittany Brooking Student number: 10139648 Due date: Friday October 26 Word count: 1861 words 2 Under Article 25(1) of the Universal Declaration of Human Rights, adequate housing is listed as a basic human right everyone is entitled to (United Nations, 1948). For many Australians, this need is not being met

argentine economy research paper - Carson newman university - essay

3396 words - 14 pages Kunzle. 1 Ivo Kunzle Econ 404 Dr Tori Knight 04/07/19 Argentina, from the top to the bottom In this essay, I explore the Argentine economy, first targeting its ups and downs from the 1975 and on, going through the economic crisis of the early 1980s that submerged the country in hyperinflation leading to a currency change from “Peso Argentino” to “Austral” during the government of Raul Alfonsin. The second hyperinflation that forced the country

Macroeconomic Review Of Japan

9970 words - 40 pages , while population ageing is reducing the size of the workforce.In sum, the positive developments during the current expansion do not reduce the urgency of a broad programme combining macroeconomic and structural policies.DeflationIn economics, deflation is a decrease in the general price level, or a rise in the purchasing power of money with respect to a large class of consumption goods or services. Inflation is the opposite of deflation.The

Similar Papers

Inflation Priority Of Uk Macroeconomic Policy? Parmiters School Economics Essay

1228 words - 5 pages To what extent do you agree that maintaining inflation at the target rate of 2% should be the top priority of UK macroeconomic policy? Justify your answer The UK government has given the Bank of England an inflation target of CPI 2 % +/-1. The Bank of England is responsible for using monetary policy (e.g. interest rates)  to achieve this goal of low inflation. But, as well as targeting inflation, the Bank of England also has a wider remit of

Personal Statement For All English Classes Eshs English 12 Essay

814 words - 4 pages I am always fascinated by the world of economics around us and like to follow economic issues through the news and media. My passion of Economics and Finance has led me to choose Economics as my bachelor studies and Finance as my major. I have always enjoyed areas that require problem solving, analytical and obvious implications in real life. I am anxious to combine the knowledge, aptitude, and skills with my interest in Economics. My desire to

Television Essay

1855 words - 8 pages 299).In 1950s, parents, teachers and social scientists asked their legislators to do something about the harmful effects of television viewing (Bryant 164). The first ever-congressional hearing took place in 1952 over the fact that violence was going to corrupt the minds of young children due to the violence shown on the television shows (Basta 200). Since then policies have been made to continue research and monitor and analyze and explain the

Economic Final Exam At Cdu 2016 Cdu Exam Paper

1044 words - 5 pages 95 9 20 115 (5 marks) THIS EXAMINATION PAPER AND SUPPLIED MATERIALS ARE NOT PERMITTED TO BE REMOVED FROM ANY EXAMINATION VENUE IN ANY CIRCUMSTANCE. THIS EXAMINATION IS PRINTED DOUBLE-SIDED. Semester 1, 2016 FINAL EXAMINATION ECO504 – Business Economics Page 5 of 5 Section C Short Essay Questions Total No of Marks for this section: 30 marks This section should be answered in the Answer Booklet provided. Each question is worth 15 marks