Nobody downloaded yet

MACROECONOMIC - Essay Example

Comments (0) Cite this document
Summary
MACROECONOMIC Contents Fiscal Policy 3 Instruments of fiscal policy and the effectiveness of the different measures in stimulating aggregate demand 3 Fiscal policy stance 2012 (Australia) 5 Appropriateness of the fiscal policy stance 6 References 8 Fiscal Policy The term fiscal policy refers to the use of the revenue of the government as well as the spending for the welfare of the economy…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER97.3% of users find it useful
MACROECONOMIC
Read TextPreview

Extract of sample "MACROECONOMIC"

Download file to see previous pages 2). The objectives of economic growth, stability in prices and the desired level of employment can be attained through fiscal policies. Instruments of fiscal policy and the effectiveness of the different measures in stimulating aggregate demand There are three main instruments of fiscal policy as discussed below. They are public debts, taxation and public spending. The instruments can be sued by the concerned authorities to achieve the desired level of production, national income as well as consumption. The term aggregate demand refers to the total expenditure made by the households, government and businesses on the goods and services that are produced domestically. It describes the behaviour of the buyers in response to changes in the policy implementations. If the level on inflation rises, the purchasing power of the consumers fall and therefore the aggregate demand curve is downward sloping (Auerbach, 2005, p. 3). This is described in the diagram below. Increase in government spending: The increase in the expenditure from the part of the government is likely to shift the aggregate demand curve to the right. The diagram below will provide the realistic picture. The increase in government spending means more money or disposable income on the hands of the consumers. The level of employment will take the upward rising curve and therefore it is natural that the aggregate demand curve will budge to the right as the overall level of demand within the economy will rise. Increase in tax cuts: The increase in tax cuts is expected to have the same effect as the cut will stimulate investment spending and the level of demand exiting in the economy will rise. Therefore the aggregate demand curve will budge to the right in this case as well. Fiscal policy stance 2012 (Australia) The fiscal deficit of Australia reached at the level of 44.7 billion dollars during the year 2012. The fiscal stance that the government adopted during the federal budget during that year was mostly emphasized upon reducing the government expenditure. There were announcements of several new taxes namely minerals resource rent tax and the carbon price. There were some additional to fund reconstruction after natural disasters. The following diagram will show the government spending for the 2012 for Australia. The following table shows the personal tax rates for the country in 2012. Appropriateness of the fiscal policy stance Variation in outcomes can be witnessed among the different industries. The high commodity prices boosted the national income while the terms of trade reached at the record level in that year. On the other hand the conditions remained subdued in the fields of investments as well as in the arena of household spending (WACE Revision Centre, 2013, p. 12). The rate of unemployment has remained at the level of 5.25% although there was slight improvement in the unemployment conditions in the middle periods of 2011. The expenditures made by the consumers have remained at the moderate level with no surprising trends. The ratio of net wealth to disposable income has fallen in the recent years. The business investment rose sharply till the second half which drove in capital imports into the country and the impact of the capital imports had significant effects on the current account balance of the country. The demand stimulus of the country contracted ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“MACROECONOMIC Essay Example | Topics and Well Written Essays - 750 words”, n.d.)
MACROECONOMIC Essay Example | Topics and Well Written Essays - 750 words. Retrieved from https://studentshare.org/macro-microeconomics/1478060-macroeconomic
(MACROECONOMIC Essay Example | Topics and Well Written Essays - 750 Words)
MACROECONOMIC Essay Example | Topics and Well Written Essays - 750 Words. https://studentshare.org/macro-microeconomics/1478060-macroeconomic.
“MACROECONOMIC Essay Example | Topics and Well Written Essays - 750 Words”, n.d. https://studentshare.org/macro-microeconomics/1478060-macroeconomic.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF MACROECONOMIC

Macroeconomic problem

...Macroeconomics Section I a) The equilibrium interest rate is determined where the money demand is equal to the money supply. It is the point of intersection of the money demand curve and the money supply curve. At this point, the economy will be at stability as there is neither excess demand nor excess supply of money in the economy. An interest rate above the equilibrium interest rate has more money supply than money demand. The market forces will pull the interest rates downward hence restoring the equilibrium rate. On the other hand, any interest rate below the equilibrium interest rate will experience a higher demand than supply causing a rise in the interest rate (Floyd 56). The amount of money supplied by the...
6 Pages(1500 words)Essay

Macroeconomic

... has a direct negative impact on the national saving in the long run. It has been argued that in the long run there are chances that the saving and output are going to fall because the government would try to compensate for the revenue losses through changes in the policy; this may include tax hikes (Francis). However the effects of tax cut are in the long run would vary according to the taxpayers. Works Cited Francis, David R. Effects of the Tax Cut on Saving. The National Bureau of Economic Research. Web. 11 Jan. 2011. Mankiw, N. Gregory. Principles of Macroeconomics. 5th ed. Cengage Learning. Riley, Geoff. Fiscal Policy Effects. Tutor2u, 2006. Web. 11 Jan. 2011.... By utilizing "impact", "time", and "population affected", how Washington...
2 Pages(500 words)Essay

Macroeconomic

...? Macroeconomic Contents Introduction 3 Question a 3 Question b 4 Question c 6 Conclusion 8 References 9 Bibliography 10 Introduction High terms of trade are the characteristics of the current economy of Australia. It can be witnessed that the terms of trade has fallen in the recent months yet the rate has been historically high and volatile. The level of real income rose as the result of high terms of trade as well the inflation rate got reduced. The ratio between the prices of exports and the prices of imports are regarded as the terms of trade. With high rate of terms of trade the country will be able to obtain higher imports with relatively fewer amounts of exports. The volatility in the expenditures made by the consumers can... . The...
6 Pages(1500 words)Essay

MACROECONOMIC

...in Australia. The carbon pricing was introduced and made functional from July 2012. The pricing is to take effect in the form of tax that is to be put on the emissions of carbon. The pricing is meant to cut the emission of carbon in the Australian environment. These pricing is directed toward the level of carbon in the outputs and the inputs of product from the industry. The tax on carbon will have quite an effect on the macroeconomic environment in the sense that the tax might be passed down to the consumers who are the Australian people. The effect can be felt in the price of commodities. The effects of carbon pricing The Australian society is a very large consumer of electricity. This electricity is mainly produced by...
4 Pages(1000 words)Essay

MACROECONOMIC

...? Australia: Fiscal Policy Australia: Fiscal Policy Answer The government’s policy related to its spending and raising revenues is called fiscal policy. It associates matters of treasury and other public finance (Vitek, 2012). In other words, fiscal policy can be referred to as the method to raise or spend the government’s revenue in order to attain sustainable economical condition (Vitek, 2012). To cope with instable economical conditions (inflation, unemployment, and deflation) the government makes appropriate decisions to regulate the flow of cash and credit in an economy either by taking loans from the international financial bodies or by reducing the public tax burden (Perry, et al., 2008). Therefore, fiscal policy addresses... Australia:...
4 Pages(1000 words)Essay

Macroeconomic

...it to investors in the market. This would then finally help in augmenting the level of income in the economy in the long run (Arnold, 2008). Reference List ABS, 2013. Australian Bureau of Statistics. [online] Available at: [Accessed 30 August 2013]. Arnold, R. A., 2008. Macroeconomics. Connecticut: Cengage Learning. BEA, 2012. U.S. Economic Accounts. [online] Available at: [Accessed 30 August 2013]. BLS, 2012. Labor Force Statistics from the Current Population Survey. [online] Available at [Accessed 30 August 2013]. DFAT, 2013. Department of Foreign Affairs and Trade. [online] Available at [Accessed 30...
5 Pages(1250 words)Essay

Macroeconomic theory

...Macroeconomic theory The central puzzle of human history is to account for the widely divergent paths of historical change. How have societies diverged What accounts for their widely disparate performance characteristics ... Although we do observe some convergence ... the gap between rich and poor nations, between developed and underdeveloped nations, is as wide today as it ever was and perhaps a great deal wider than ever before. What explains the divergence And perhaps equally important, what conditions either lead to further divergences or produce convergence North (1990, pp. 6-7). In the context of the present paper, the above questions have two implications. First, what macroeconomic policy-mix is...
3 Pages(750 words)Essay

Macroeconomic

..., in the hope that the fluctuation is temporary, and the situation will improve in the long run. Increased imports result because of a weakened sterling, which makes imports cheaper than domestic products, and it makes business sense for investors to import substitutes for domestic products since the imports are more affordable to consumers. Figure 3: Graph of major macroeconomic indicators in the United Kingdom and the OECD (OECD, 2011). This graph shows that United Kingdom is a major contributor in the poor economic situation in the OECD countries. The shaded region indicates the maximum and the minimum values of the indicators in OECD countries. However, this does not mean that a deficit is unfavourable, or that...
12 Pages(3000 words)Essay

Macroeconomic

...The Morning After, Start Now” by Michael Tomasky discusses four vital issues that the newly re-elected president must address in his second term in the White House. These are fiscal cliff, climate change, immigration and foreign policy which all show some relevance to macroeconomic principles. The article addresses each of these issues and what Pres. Barack Obama must do to achieve good results together with the people who might be able to help him. Fiscal cliff, Tomasky suggests, will most probably be responded to with the impending tax increase proposal and government cuts on spending. Climate change may no longer be ignored and new policy points to carbon tax to deter carbon emissions. Immigration is another pressing...
1 Pages(250 words)Essay

Macroeconomic

...Macroeconomic Situation of US Macroeconomic Situation of US Since the start of the recessionary period of 2008, US have been trying to recover from several macroeconomic issues. Towards the end of March 2012, the unemployment rate of US stood at 8.2%, although US successfully created over 120k jobs in a time period of 7 months but it is still below the targeted increase in employment rate which is set at 200k which will help US solve its unemployment problem (OECD, 2012). The consumption levels and the rate of GDP is even increasing but at the rate of which a tortoise travels, this is because of increased oil prices and damaged confidence of the investors, while the Federal Reserve has...
1 Pages(250 words)Essay
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Essay on topic MACROECONOMIC for FREE!

Contact Us