Essay help! (1 Viewer)

[rsingh]

Hey guys, I'm practising essay questions for eco. and I'm not sure how to go about answering this question.

"Analyse the effectiveness of monetary policy in acheiving the goals of economic managment in Australia."

Any help as to what to include, and how to go abt answering it would be hreatly appreciated!

Thanks guys.

This is my first attempt at practising essay questions and thus I'm not so sure how to approach it the right way.

 

[lilkiwifruit]

Hey guys, I'm practising essay questions for eco. and I'm not sure how to go about answering this question.

"Analyse the effectiveness of monetary policy in acheiving the goals of economic managment in Australia."

Any help as to what to include, and how to go abt answering it would be hreatly appreciated!

Thanks guys.

This is my first attempt at practising essay questions and thus I'm not so sure how to approach it the right way.

LOL That was our extended response ques in the yearlys ummm..you could say what is MP and how is it implemented and then add some graphs and then talk about the effectiveness of MP and what its current stance is...something like that good luck

 

[Rafy]

Yeah i did the Question too, it was in the Catholic trial

Well currently, monetary policy is the only real macro policy being utilised (Fiscal policy, while slightly expansionary, has little effect) Even so, the RBA are really sitting around doing nothing.
That is beacuse macroeconomic policies only effect demand. The problem with economic management in Australia is now on the supply side. Macroeconomic policies can do little now to sustain economic growth, as the growth of the last 15 years has meant demand has peaked at the quanity we can supply. So to increase gorwth further we must increase our ability to supply so we can exploit higher demand (from a booming china etc)

So at the moment monetary policy its not effective at all in acheiving economic sucess and is indeed taking a back seat (As shown by the RBA really doing nothing to rates lately)

The gov needs some micro reform.

 

[rsingh]

Thanks for your help guys!
Deus, you mentioned something that I have never considered at all .. wow! thanks for the help!

I was just wondering whether you guys could assist me in developing a structure to answer this question?
I was thiking abt mentioning how effective MP has been in achieving growth, internal balance and external stability paragraph by paragraph. Also in the answer, something abt the current stance of MP (duh!) and uhh .. maybe i the conclusion something abt what needs to be done for further effectivenes (like what Deus said and that MP needs to be used in conjuction with fiscal policy and microeconomic policies for maximum effectiveness)

So does that ok?
I juss need a thorough structure!

Oh by the way, is this question from the 2005 Catholic Trial?

 

[azza_3761]

Introduction - address the question
- state the stance of the MP ( mildly contractionary)

A paragraph on each of the 6 economic issues stating the governments concern for the issue, the objective they are trying to archieve and the MP's effectiveness

Conclusion - readress the question breifly and conclude

 

[sunjet]

it's been effective in the short term -> inflation average 2.4% since inflation targetting set at 2-3% in 1996.

 

[rsingh]

thanks azza!
so in the intro, do i say something like...
"The current stance of monetary policy is contractionary ..."

??

 

[sunjet]

If you want, then do all the theory behind monetary first in like a page (ie. RBA buying/selling, graphs, definitions) -> then go into impacts and saying whether its effective etc

 

[Rafy]

thanks azza!
so in the intro, do i say something like...
"The current stance of monetary policy is contractionary ..."

??

MIDLY contractionary. It really dosent have much effect. In fact the fiscally expansionary and monetary contrationary nearly cancel each other out. As i said its micro reform thats now needed. (Which the gov is starting to do...i.e workplace relations reform)

But yeh i set it out into a way that sunjet described.

I started with an intro that didnt include much of the theory though.

I then BREIFLY went into how the RBA effects rate and therefore acheives its economic management goals.

The main part of the question is effectiveness....so..

Basically what its effects on the economic indcators and the ability of RBA to respond to and eliminate economic threats as well as to ensure sustained economic growth. SO basically the policy's CURRENT ability to ensure that economic growth is at its highest and employment is at NAIRU sso growth without the effects of inflation and unemployment etc etc. ANd in that i include what i say about the current ineffectiveness of Macro reforms. That have done all they really can do in this booming economy.

It may seem obvious enough, but the biggest limitation of monetary policy IS that it can only really affect aggregate supply. Thats one side of the equation. So there must be a mix between all the policies avaliable to a government to acheive econmic objectives.

Ive read quite a few responses to this question at my schhol. Many just DESCRIBE how the RBA shifts rates and why, with a brief description of its effects. That will NOT get you the marks. You have to show the relationships between all the indicators, the different policies abaliable and the relationships between effects. Thats what i mean about synthesising a bit. The question dosent ask HOW the RBA acheives economic objectives, but rather the EFFECTIVENESS of them. Its a mistake ive seen so many people make in the trials

 

[sunjet]

also put in limitations, ie. time lag, blunt instrument