Australia's Economy Over The Last Two Years Essay

Australias Economy Over The Last Two Years - Essay simulationIn Australia, the Australian government and the coyness Bank of Australia play a major role in the farmings economics, as these determine the macroeconomic policies in the country. According to the International Labour brass instrument (2013), a microeconomic polity that is aimed at achieving economic stability in a country, is a dominant condition for the achievement and sustenance of high levels of development tin a country. Nonetheless, this part of the essay explores the main macroeconomic policies utilise by the Australian Government and the Reserve Bank of Australia over the last ii years. There are two ticker macroeconomic policies, which a country can use, and these include the financial and the fiscal policy. Nonetheless, the Australian government and the Reserve Bank of Australia have in the past two years, used these to control the economy. Fiscal policy in Australia includes the level and composition of government revenues and outlays, methods of financing a cypher deficit or using a budget surplus, the operation of automatic and discretionary stabilizers, and the provision of incentives to extend aggregate supply. According to Parkinson (2012), a major function of Australias fiscal policy is to ensure the keep of fiscal sustainability from a medium-term perspective. Parkinson (2012) also notes that monetary policy in Australia has the main purpose of maintaining inflation surrounded by 2 and 3 percent. The monetary policy in Australia has to do with the Reserve Bank of Australia beguile yard, as well as the exchange tell policies, and transmission mechanisms. This serves to anchor inflation expectations, and has the responsibility of managing demand. This is with the aim of ensuring that the countrys economy remains on a stable path of growth, and maintains a low rate of inflation. Therefore, monetary policy and fiscal policy, as well as exchange rate, are three core asp ects of Australias macroeconomic framework, which have been extremely important for the past two years, as these have provided a great level of flexibility for the country to deal with economic shocks that it experiences from time to time. Parkinson (2012) notes that the Australian macroeconomic policy framework is an asset and an endowment to the country, as it forms a core part of the countrys prolific base. Nonetheless, for the past two years, these have been effective in ensuring that Australia addresses its economic problems, and the Australian government achieves its economic objectives. The Reserve Bank of Australia deals with all the issues pertaining the monetary policy. Nonetheless, a major aspect of the monetary policy, which the Reserve Bank of Australia utilizes is the interest rate. This interest rate influences differently other interest rates in the economy, so that the borrowers and lenders in the cash markets come under the influence of the monetary policy. The R eserve Bank of Australia controls the interest rates in a manner that will ensure that the objectives of the Reserve Bank Act 1959 are attained. These include, and are not contain to ensuring a stable currency of the country, preventing unemployment, boosting living standards of citizens, and ensuring economic empowerment of the people (Reserve Bank of Australia 2013). In outrank to ease or loosen bonds, the Reserve Bank of Australia would buy bonds in order to create special liquidity, putting downward pressure on interest rates, allowing increased consumer and investment spending, and finally lower the rate of unemployment. Similarly, when there is a possibility of the rate of inflation to increase, the Reserve Bank