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Comparing Fiscal and Monetary policies

Assessment Task : Notes

Students must use appropriate theories and policies to explain the implications. Monetary policy conduct must be explained with proper money market diagrams with MD-MS and interest rates and the impact of the money market on AD_AS models.

Fiscal policy implementation should discuss the government expenditure, government revenues and taxation issues and implications on consumption pattern, using consumption function such as

Y –T = YD = C + S;

C = f(YD) = autonomous expenditure + MPC x YD

Changes in the GDP components must be analysed separately by using AE component such as

GDP = AE = Y = C + I + G + NX.

Globalisation must be analysed in terms of (a) reduction in trade barriers; (b) less costly access to G + S, factors of production and technology; (c) speedy information flow and retrieval.

Government regulations should be treated as an exogenous variable and growth models such as growth accounting approaches must be used to explain those policy issues.

Students must use GFC impact on various economies comparing emerging economies, market failures, economic meltdown and stagflation.

Resource utilization should be analysed using AE and AD+AS models to identify the impacts on the macro variable fluctuation. Comparing and contrasting two-speed economy model would be a definite advantage.

Purpose and Overview

This assignment is based on a specific economic policy issue and it needs to be completed individually. This will further test your knowledge and skills on various economic theories and application of appropriate theories in problem solving. This contemporary theoretical and analytical task will evaluate the potential impact on government and business.

Assessment task:

Select a current macroeconomic policy issue which affect the operation of government and businesses in the changing global economic phenomenon and paradigm shift (your lecture topics will help to identify various macroeconomic policy issues).

Compare how Australia and one other country (select country from the list below) address the selected policy issue. Outlining your own criteria for assessing each country’s response, discuss which is the most effective and why. Utilise appropriate diagrams and theory to support your arguments.

Countries for comparison:

  • United Kingdom
  • United States
  • Sweden
  • Japan
  • Germany.
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