question about research task on inflation (1 Viewer)

[rorypie]

hi guys this is my first time asking here and idk if my question is too specific but ill ask anyways!

If a subtopic of my research on inflation includes policies to address the issue, and the textbook and booklet provided as the theory ( as well as outdated examples) dont include the targeted effects and specific implementation of these policies in terms of how they work a.k.a MP and transmission mechanism, should I still be researching these flow-on effects in a narrow sense, or just leave it at what they are and what they are targeted towards achieving + a relatively broad evaluation on how they impacted/addressed inflation as an issue - like the notes and correlated txtbk chapter does? Or am I required to bring in background knowledge of the MP chapter we did earlier in terms of all its mechanisms in relation to addressing inflation and spend time researching this + compiling notes.?

im asking this bc im scared there will be a 3+ marker on potentially discussing policies and what i have is too broad or just data and not enough evaluation on cause + effect of this strat on inflation levels, though this is not provided explicitly

lmk if this is worded confusingly or im just overthinking lol thanks. HSC economics btw!!

 

[mmmmmmmmaaaaaaa]

You should do both " what they are and what they are targeted towards achieving + a relatively broad evaluation on how they impacted/addressed inflation as an issue" and " bring in background knowledge of the MP chapter we did earlier in terms of all its mechanisms in relation to addressing inflation"

But by no means should you not research the flow on effects as that will ultimately help you in your understanding of the topic, therefore in your responses as well

 

[gazzaboy]

I think there are two parts to evaluating the effect of a policy. You want to be able to explain the theory behind the policy. For example, if the cash rate increases, then you can explain the transmission mechanism: for example, cash rate increases -> banks increase their interest rates -> overall aggregate demand goes down and shifts to the left -> decrease in price levels and real GDP. You should try to explain multiple mechanisms if possible. So yes I think it's good to explain this "flow" because I think this demonstrates to the marker that you understand the content.

Then you want to provide evidence to then make a judgment about whether the policy was effective or not (perhaps based on specific criteria, if it is an "Evaluate" question). Statistics and examples are helpful here e.g. inflation rate changed from X% to Y%. For this, you might be limited. From a practical level, if you have examples that are too recent, you won't know the effect until later on. For example, in the most recent budget, there are initiatives to reduce inflation by subsidising household energy bills by $500 each, but this will only start in July 2023, and we probably won't know the effect until next year because it takes time to know.

Another point to make is that linking cause and effect in real life is actually quite difficult because usually it's a combination of multiple policies that leads to some outcome.