Describe and Evaluate the main Macro Economic Policies used by the Essay

Describe and Evaluate the main Macro Economic Policies used by the Australian Government and Reserve Bank over the last two year - Essay Example In the last two years, the government’s goal has achieved economic growth, internal and external balance within an economy thereby maintaining economic growth and low inflation as well as ensuring low foreign debt and liabilities. Although economic growth has not been constant for the last two years due to international business cycles, the government has reduced the fluctuations via influencing demand. In as much as the economy has had several ups and downs, her improved international demands and rich natural resources such as iron ore and coal. According to â€Å"International Monetary Fund,† Reserve Bank of Australia has strengthened financial system in such a way that the macroeconomic policy is devised to curb recession instead of controlling inflation (Web). Macroeconomic aggregates which include rate of inflation, GDP growth and unemployment rate can possibly reflect the performance of a country’s economy. ... even as other countries such as U.S are struggling to recover from recession, the Australian government has boosted the economy by encouraging export to Asia (125-128). The government’s move to incorporate interest rate is aimed at promoting non-mining and housing investments which play integral role in spurring economic growth. Reserve Bank of Australia further made some great efforts in controlling money supply through the open market operations which involves purchasing or selling of financial instruments (Web). This has stabilized the Australian economy for the last two years because of their eventual effect on consumption and investment. According to Soliman RBA’s monetary policy for the last two years has been directed to achieve 2-3% inflation rate on the average over the cycle and this has really stimulated economic activities without interfering with economic decisions in the economy (98-100). It is apparent that both the government and the RBA have instituted strong fiscal and monetary policies that have successfully countered the economic recession. Theoretically, reduction of interest rate would enhance aggregate demand by influencing the aggregate components such as stimulation of investments projects as borrowing would be less expensive. The attraction or creation of a good investment environment has been one of the core activities that the government has dealt with in the previous years as this will deal with unemployment issues. Soliman explains that low interest rate has enabled Australia to increase her export while reducing their imports thus enhancing net export (101-102). The monetary policy decision process in Australia which includes the RBA board has been frequently meeting to discuss new developments in both Australia and international