The Role Of Fiscal And Monetary Policies

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In Australia the use of fiscal and monetary policies are implemented to achieve a steadily growing and stable economy. The main features to achieving the macroeconomics objectives are fiscal policy, monetary policy and floating the exchange rate. Macroeconomics looks at the economy as a whole and these policies are used and manipulated due to the current state of the economy. The four main macroeconomic objectives are full employment, external balance, economic growth and price stability. The changes to rates and implementations from the Government will be documented in terms of months. Not all rates change monthly (eg. GDP presented quarterly) but all trends such as unemployment and expenditure and analysed in time brackets of months…show more content…
The agreement states that several tariffs are eliminated between the two countries when importing or exporting goods. This trade shows interdependence between the two countries as they are agreeing on terms which benefit each other. Important factors of the trade agreement will affect the supply of Australian agricultural exports positively. General evidence of this can be seen in the decrease of the exchange rate from January (20th) to February (23rd) as it decreased by 2.2 (66.60 - 64.4) which can be seen as expansionary for the economy. The trade agreement also includes key outcomes such as market access for Australian law firms and financial services provided from China to Australia. Both firms and consumers will benefit from the agreement as goods such as electronics, whitegoods and general exports will be cheaper. These outcomes will most likely result in growth which complies with Australia’s economic goal of growth, and steady inflation. Above this inflation will most likely decrease next month as price stability will take effect on the Australian economy. The free-trade agreement also links with Micro Economic reform as trade is ongoing and promotes competition. As the supply of Australian dollars on the Forex market will be increasing due to cheaper imports, this will apply an upward pressure to the exchange rate. External balance will also be achieved through the agreement as both importers and exporters will be benefited.
February 2015
In the second
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