our Policy Brief needs to consider the impacts of the pandemic on economic inequality. To analyse this issue, your team is gathering data to calculate changes in the Gini Index (or Gini Coefficient) for Australia. There were concerns among policymakers that the economic shock of the pandemic would lead to a worsening of income inequality, unless the government implemented some sort of policy intervention. Your colleague has drafted the following paragraphs which attempt to explain the Gini Index. Check the content of the following paragraphs for accuracy. The content refers to some of the economic evidence that we have examined in our classes in relation to what happened to the Gini Index in the years following previous pandemics and epidemics. Provide your corrected version. During the first few months of the pandemic, there were concerns among policymakers that the COVID-19 pandemic would have the effect of worsening income inequality. A worsening of income inequality wou
Now that you have developed an understanding of the policy tools that are available to address economic challenges, your task is to prepare material that will go towards a Policy Brief analysing Australia’s economic recovery from the COVID pandemic and building an equitable and resilient economy in the future.
Imagine you are now employed as a Graduate Economist working for the Australian Treasury. Your team is responsible for putting together a Policy Brief for the department that summarises some key aspects of the government’s policy responses to the COVID-19 recession and provides policy analysis to strengthen Australia’s economy in the future. You have a very important job!
Your task is to provide clear answers to the following queries that have been requested from your department manager, using the knowledge and skills that you have gained from your
- Your Policy Brief needs to consider the impacts of the pandemic on economic inequality. To analyse this issue, your team is gathering data to calculate changes in the Gini Index (or Gini Coefficient) for Australia. There were concerns among policymakers that the economic shock of the pandemic would lead to a worsening of income inequality, unless the government implemented some sort of policy intervention.
Your colleague has drafted the following paragraphs which attempt to explain the Gini Index. Check the content of the following paragraphs for accuracy. The content refers to some of the economic evidence that we have examined in our classes in relation to what happened to the Gini Index in the years following previous pandemics and epidemics. Provide your corrected version.
During the first few months of the pandemic, there were concerns among policymakers that the COVID-19 pandemic would have the effect of worsening income inequality. A worsening of income inequality would be indicated by a decline in the value of the Gini Index.
Previous studies investigating the effect of past pandemics have shown that Gini Index has increased following pandemics or epidemics, with this change lasting for up for at least 4 to 5 years after the event.
The Gini Index is related to the Lorenz Curve. If inequality gets worse, this would be visually illustrated by the Lorenz Curve moving closer towards the 45 degree line of perfect inequality.
If the government is concerned about income inequality worsening during the pandemic, the government should scale back its transfer payments and allow automatic stabilisers to take effect.
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The Treasury has been paying close attention to the policy actions taken by Australia’s central bank, the Reserve Bank of Australia (RBA), which also plays an important role in managing the Australian economy.
- For your Policy Brief, you have been asked to write some background information on the role of
monetary policy in managing the economy. Explain the difference between expansionary monetary policy and contractionary monetary policy? As part of your explanation, identify the conditions in which a central bank would implement expansionary monetary policy and the conditions in which it would implement contractionary monetary policy. In your answer, refer to themacroeconomic objectives that the RBA is responsible for in its charter. (3-4 sentences)
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