Macro-Economic Recession In Australia

In this report you will find current and past trends and target values for these indicators and the current macroeconomic policies of the Federal Government of Australia and the RBA.

The figure obviously had not return to pre-crisis level. Moreover, recent commodity prices had fallen significantly which will affect Australia’s short and long term economy.

The Australian Competition and Consumer Commission (ACCC) is an administer of the competition and Consumer Act (CCA) which is to prevent collusion among the firms and to prevent the individual firm which break the market equilibrium with their market power. Well competitive market would deliver efficiency costs, faster innovation, prevention of unduly concentrated markets, business freedom, wealth distribution, and enhancement of international competitiveness. Therefore, the ACCC is playing a crucial role in Australia, and their activities can be divided into four categories; (1) the policies for anti-competitive conduct and anti-competitive practices, (2) the mergers policy, (3) the consumer protection policy, and (4) four pillars policy.

A macroeconomic policy is known at the government’s regulations to control or stimulate aggregate indicators for the economy. In other words, these are policies that focus on providing solutions to help stimulate economic growth and fight financial situations; in this case the recession. The macroeconomic policy that would be a legitimate solution to the recession would be Fiscal Policy, but more specifically, Expansionary Fiscal Policy. The reason why this would be a legitimate solution is because unlike Expansionary Monetary Policy, it has a more direct effect on aggregate demand. In other words, the government will aim to increase how much money is spent in order to stimulate aggregate demand. Furthermore, potential tax cuts will serve as a catalyst for spiking aggregate demand by granting people the capability to consume and invest (Forsythe, 2012). As an ultimate effect, the recession that America is going through will show more direct signs of economic growth, and will not have much of an influence in sparking inflation in the long

The Great Recession has been one of the largest fiscal crises of the current generation and the economic downturn that resulted has been recorded as the longest and most severe since the Great Depression ("The Impact of the Recovery Act on Economic Growth"). Although the economy has reached a stage of recovery, the effects of the recession to real GDP can be seen in business cycle figures for the period. Shown in Table1, the change to real GDP was measured at -3.9% for the recessionary period. This step into recovery was brought about by an aggressive stimulus package based on the principles of Keynesian economic theory

not have otherwise got, at perhaps lower levels of penalty rates than they would have wanted, but they got a job.

Booms, busts, recessions, and growth; all of the preceding terms are characteristics of a typical market economy. There are times when an economy can flourish spectacularly and there are times when it can fail miserably. Consequently, it is the responsibility of a nation’s central bank to manage these fluctuations through conducting effective monetary policy. The following paper will assume the perspective of the Reserve Bank of Australia (RBA) and critically analyze the past, present, and future of the Australian economy while considering specific sectors.

When the price level rises, each unit of currency buys fewer goods and services. Over the long term, unanticipated inflation can cause a number of problems for an economy. Businesses will invest less in long-term projects because of the uncertainty of returns, price information becomes unclear, and consumers will spend more time trying to protect themselves from inflation and less time engaging in productive activities. If the Australia’s inflation rate is above normal range, then its cause for concern. It has impact on various ways in the economy.

Australia floods of 2010–11, natural disaster that principally affected the three eastern states of Australia and was one of the worst in the country’s history. Queensland, in the north, was hit hardest, but the widespread flooding—of a scale not seen since the mid-1970s—that began in late November spread southward to inundate portions of the neighbouring states of New South Wales and Victoria by early 2011. Some 35 people died in the flooding, and property damage and other economic losses amounted to billions of dollars.

This paper is structured as follows. In order to better understand the Great Recession, the first section includes an examination on some of the key causes. Section two outlines some of the fiscal policy responses made by the government to the Great Recession. In the third section, relevant extant literature

Overview of RECENT Reductions in the cash rate and the Effects on the Australian economy.

In 2007-2009 the recession in the U.S economy was long and deep. At some point the economic activity was reasonable in 2008, but the economy overtaken by a financial problems that could improve the economic weaknesses. The economy was recovered in mid of 2009. GDP has been in a stable path since then, although the jump has been unequal and slowed down in 2011. The high rate of long term unemployment and the labor rate has decreased the labor market. In the paragraphs below, I’m going to define the fiscal policy and explain how it could resolve the economic paths in the short term long term.

In order to reduce inflation the Australian government has traditionally implemented both contractionary fiscal and monetary policy. This would involve an increase in taxation or reduced government expenditure as well as increases in the official cash rate which would lead to a rise in interest rates in the economy to contain aggregate demand.

Every time we feel the onset of a recession or the economy starts to slow down, the government looks to restore the economic growth through different stimulus plans. The recession of 2008 was one example. When the housing bubble burst it caused panic with quick financial fallout, “the government took immediate measure to stimulate the economy back to normal and to restore confidence in the economic market”.

With the disaster of the recession and the outcome made a drastic drop in the GDP that includes investment, government spending and net exports. Decision making from the government has been a crucial aspect on the recovery of the United States. Through this time expansionary policies were put into effect, interest rates were reduced; tax cuts and breaks were put into place. Individuals received earned income incentives along with an increase in child credit; and corporate taxes that were decreased are just a few examples. Comparing to prior years expansionary policies were higher through our recent recession then before. There is argument whether or not those fixes have made a breakthrough for the economics of the country. Today the economy is slowly making a comeback. As jobs are opening, and housing is getting back on track. The fiscal drag is expected to make a positive impact, federal fiscal movements of contractionary policy is anticipated to continue improving our economy over the next few years. Some downfalls that can appear with fiscal policies are crowding out, time lags, and national debt. First, crowding out when expansionary fiscal policy causes a decrease in planned investments or planned consumption in the private sector. This usually creates a rise in interest rates (Miller 2012). Second, lag phase when the economy is in a decline or increase economically there is information that is gathered before a policy can be implemented. Than we cannot forget the time, it takes once the policy is put into effect to know whether it has made a difference in the economics for the country. Thirdly, national debt when our economy is at a decrease government spending is at an increase. The United States is trillions of dollars in debt borrowing from