Quick Qn (1 Viewer)

[nick90]

Gday, just a quick question. Does ALL government intervention in the economy fall under the headings of either 'macroeconomic policies' or 'microeconomic reform policies'?

Also, could someone please define 'macroeconomic policy' and 'micreconomic reform policy' concisely in one sentence each for me?

Thanks v. much

 

[Demandred]

Not entirely, redistribution of income and government spending/taxation maybe exceptions, there's also the case of promoting merit and discouraging demerit goods.
Macroeconomic - policies which affects the economy as a while, indiscriminate.
Microeconomic - policies which affects specific sectors.

 

[Sparcod]

One more difference between microeconomic and macroeconomic policies that can be added onto the above definitions.

Macroeconomic- policies aimed at providing favourable economic outcomes in the short-run.

Microeconomic- policies aimed at providing favourable economic outcomes in the long-run.

 

[nick90]

Thanks very much.

Another question - what is fiscal stance?

 

[nick90]

Thanks heaps.

 

[Ozza]

Not entirely, redistribution of income and government spending/taxation maybe exceptions, there's also the case of promoting merit and discouraging demerit goods.
Macroeconomic - policies which affects the economy as a while, indiscriminate.
Microeconomic - policies which affects specific sectors.

As an addition, fiscal policy is the one the government uses to redistribute income, allocate resources and reduce the fluctuations in the business cycle. Because it includes government spending and taxation, the provision of public goods can sometimes come under this heading. Fiscal Policy is a macroeconomic policy.

There is also the prices and incomes policy, but it has to do with wage determination and I can't really remember having to go over it in yr 11, but I could be wrong. Mostly it's just micro and macro

 

[Demandred]

As an addition, fiscal policy is the one the government uses to redistribute income, allocate resources and reduce the fluctuations in the business cycle. Because it includes government spending and taxation, the provision of public goods can sometimes come under this heading.

Not really, what I am saying is the basic services that is provided by the government to ensure individuals are provided with the circumstances to which they are best able to maximise their utility in their lives, health services, education, roads etc....

The neo-classical theory of the government states that it is merely an instrument of the public, that it taxes and spends according to each person's needs, which is their contingency valuation aka willingness to pay. Macroeconomic stability has nothing to do with it, the government is simply the will of the people, amalgamating each ones desires and pursing it.

Historically, macroeconomic policies can be intended for both long run and short run.

 

[Ozza]

Fair enough, but for the purposes of answering a yr 11 syllabus, I think it's better just to say that the provision of infrastructure is part of fiscal policy because the budget does allocate certain expenditure to improving infrastructure which improves our standard of living as well as helping to deal with capacity constraints, which in the end leads to higher economic growth.