Name Institution Date Macro Economics Introduction This paper focuses on the statements made to the media by Mr. Glenn Stevens, the Governor of the Australian Reserve Bank concerning the monetary policy decisions by the Reserve Bank of Australia. The statement was issued by the Reserve Bank’s Governor on the 7th of February during a meeting with the organizations Board…
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The Governor additionally states that other economies around the globe will most likely have a reduction in their GDP’s as well. He also observes that the Chinese economic growth has also been moderated with the monetary conditions within the Asian continent becoming softer. Mr. Stevens also asserts that that the prices for various commodities within the globe have reduced in the recent past despite the fact that most are currently on the rise once more reaching record high values (Stevens, 2012). Therefore, in accordance to the Governor’s sentiments, this paper tries to evaluate whether the monetary decisions made by the Reserve Bank’s Board concerning the weakening economic state in the globe are appropriate to the country and within its mandate. Economic Concepts/ Theories To Be Applied Under the law on the Reserve Bank that was enacted in the year 1959, they are charged with the duty of formulating the country’s monetary policies (Graziani, 2003). This actually involves the act of taking actions so that the interest rates which affects the economic activities in the country. It can be done through ensuring that money is available in the country’s overnight cash markets because they affect other variables like the country’s GDP along with the levels of prices (Arnold, 2008). The law of 1959 additionally stipulates that the country’s goals in their monetary policies will be aimed at employment their whole labor force, ensuring the country’s currency remains stable, the prosperity in the welfare of the citizens financially (Bell, 2004). However, in order to ensure that the country’s currency remains stable their central bank has implemented policies that are aimed at controlling the rates of inflation in the country (Mankiw, 2011). The Australian central bank uses a monetary policy that is referred to as inflation targeting which involves their maintenance of stable but low rates of inflation. This policy has widely been utilized within the country with the belief that it will assist in creating a sounder basis for greater economic growth during the long run periods (Bell, 2004). The country’s Reserve Bank should adopt several policies that range from concepts monitoring their economic growths, business cycles, inflation along with monetary policies and their financial policy regulation. They should also keenly observe the trends within the international economy since they help in showing the direction that capital is currently flowing in (Knoop, 2009). In ensuring that the country’s economy grows, the Reserve Bank should utilize increases in their per capita’s to ensure that they grow in the long run periods. It is for this reason that some countries around the globe are termed as being more successful than others while others grow at similar rates (King, 2011). In evaluating the growth the country is experiencing, the board of the Reserve Bank should examine their investment rates, their population’s growth along with technological changes being experienced (Australia, CCH, 2011). The figures to be utilized can be found through the use of models like the neoclassical along with endogenous models for growth. In monitoring the business cycle within Australia to ensure their economic gr
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(“Macro Economics Paper Essay Example | Topics and Well Written Essays - 1500 words”, n.d.)
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(Macro Economics Paper Essay Example | Topics and Well Written Essays - 1500 Words)
“Macro Economics Paper Essay Example | Topics and Well Written Essays - 1500 Words”, n.d. https://studentshare.org/macro-microeconomics/1451451-macro-economics.
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