1 - OK macroeconomic policy includes mainly fiscal and monetary policy. It focuses on the economy as a whole. It aims to reduce fluctuations in economic activity, achieve sustainable economic growth, reduce inflation, lower unemployment and lower/maintain a lower current account deficit (external stability).
If aggregate demand changes oscillates wildly, it creates uncertainty and can undermine improvements in productive capacity. Higher levels of aggregate demand reduce unemployment but can also lead to higher levels of inflation. Conversely, lower levels of AD can create higher levels of unemployment as demand for labour is derived for the general demand for goods and services. Macro policy therefore wants to ensure that economic growth continues at a steady pace - high enough to keep unemployment low, but not so high as to lead to profligate inflation.
2 - microeconomic change, as you mentioned is more concerned with individual firms and markets. In this case it hopes to increase economic growth by improving the efficiency with which markets for goods, services and the factors of production operate. For instance, labour market reform hopes to reduce the rigidities involved that make it more difficult to find a job/be hired etc which can stand in the way of increasing employment. Similarly, competition policy hopes to encourage more efficient production methods and reduce collusion/excessive mark-ups/monopolies so that consumers are offered a larger variety of better goods and services at lower prices.
3 - There are limitations however in the enactment of these policies
a) time lag - there is considerable delay between the recognition of a problem, the formulation of the policy, the implementation of that policy and it taking effect. For a simplistic example, the RBA needs to recognise that the economy may be heading for a downturn. it needs to decide what to do (if anything). It then announces lower interest rates, and up 6-12months after the lower rates work their way into the system, businesses start borrowing and investing more and start employing more workers...
b) global influence - this should link into your first topic about how australia is impacted upon by the rest of the world. For instance, say the Australian economy is not growing, the government may decide to implement expansionary fiscal policy (eg a budget deficit) and the RBA may lower interest rates. However if the rest of the world is also in a recession, exports will decline (less injections from overseas) and businesses may then still be reluctant to borrow and invest because of the gloomy global economic outlook. In this age of globalisation, often American economic policy can counteract, undermine, enhance or overwhelm domestic australian policy - and that is something that the government/rba has increasingly had to consider. For instance, if the US cuts interest rates the RBA will probably wait to see what happens there first, or take into account the likely effects of those actions in determining their own course of action.
c) political constraints - politicians, *shock*horror* are not particularly altruistic beings. Think back to the 2001 election, although the australian economy was looking particularly robust, the Howard government were still offering ax cuts, greater spending plans etc for the sake of political advantage and re-election, rather than with regard to the economic environment. Similarly, costello just rather unsubtley warned the RBA that it wouldn't be wise for it to raise interest rates (which is not appropriate since the RBA is supposed to be independent for this very reason...). For the government, higher interest rates cause dissatisfaction amongst the electorate who now have to pay more for their mortgages etc - whilst to the RBA and economists, higher interest rates may be necessary so as to curb an overheating economy and excessive import-spending. Thus, the appropriate economic action may be constrained by competing political objectives and agendas.
