The Australian Economy in the 21st century has numerous policies to stabilize and control the economy in this brave new era of Globalisation. These policies reside on both the microeconomic macroeconomic scale, and they have objectives in stabilizing the economy.
The two main objectives of these policies include the goal to achieve an increased standard of living for the population and Improved job prospects for Australia's growing population. The first priority for a government in managing an economy is to determine what it will pursue as its economic objectives. Governments can choose to pursue a range of policy aims, and over time determining priorities.
There three main objectives in economic management: Economic Growth is one objective, which is an increase in the level of goods and services produced in an economy; this raises living standards of individuals in the economy.
Internal Balance includes pursuing the low inflation and low unemployment External Balance involves keeping the current account deficit, foreign liabilities and exchange rates at a sustainable level.
In this essay I will attempt to review the identify and explain the main methods of Firstly Macro then Micro Economic policy and then review their main objectives and their effectiveness in an era of Globalisation.
Macroeconomic policies target the whole economy, and their effects are felt throughout the whole economy. Macroeconomic policies generally target total (aggregate) demand in an economy, although they can impact total (aggregate) supply. By manipulating aggregate supply and demand governments can achieve economic objectives. Macroeconomic polices include Monetary, Fiscal and Trade.
Monetary Policy refers to actions by the Reserve Bank of Australia or RBA to influence the supply the supply and cost of credit in the economy. The main tool used to adapt Monetary Policy is the RBA's use of market operations (supply and demand of commonwealth securities)...