Economics

Economics

Introduction

The macroeconomic policy of monetary policy is defined as the Reserve Banks pursuit of price stability in the medium term. Monetary policy involves Australia's cash rate in order to maintain and influence, where necessary, interest rates most commonly in pursuit of price stability, which is deemed to be an increase of around 2-3 per cent inflation rate over the 7-10 year economic cycle (Beetsma, 2004). This policy is focused on the demand side of the economy, stimulating it or restraining it as required and therefore often referred to as demand management policies. One of the objectives of monetary policy is to maintain domestic price stability, this area of management focuses on price stability, full employment and economic growth. Domestic stability is a situation where a reasonably stable level of economic activity is achieved consistently with low inflation, low unemployment and sustainable economic growth.

Thesis Statement

This paper we will be discussing the effects of the macro-economic policy (Monetary policy) on public. Is it useful for the public or useless?

Discussion Analysis

A familiar refrain that was popular in the early 1990s is making a comeback during the great recession of 2008-2009, which has rocked the economy and labor market for more than five years: Is it possible that the children of this generation will not be as well-off as their parents? The labor market has been hobbled. The duration of unemployment has reached unprecedented levels, and it is now the case that unemployed workers in certain age groups face the prospect of never being employed again. If all of this sounds grim (and it is), consider the possibility that this may be as good as it gets.

It is true that the depth of the recession and the current sluggish recovery are much different than anything we have seen since the Great Depression. But rather than look at the current recession in comparison with previous U.S. recessions, consider its comparison with Europe. The events in Europe that sent crippling shockwaves through much of the world might be of such a magnitude that the current speed of the recovery is fast enough. The current downturn is unusual because it was triggered by a large common shock, rather than the idiosyncratic components that usually put individual countries into a recession. We don't have a lot of experience with such shocks, so it may be useful to look across countries to see how others have fared.

The U.S. economy accounts for about 22 percent of world GDP; the European Union is about 25 percent. The figure below that compares the 2008 recession and recovery in the U.S. with those in the major economies of Europe. First note that the size of the contraction was much steeper in Germany, the UK and Italy, whose economies fell roughly 6 percent from their peak. In the U.S. it was more like 4 percent. But note as well that the recovery in the U.S. has been steady compared with these countries. All except Germany appear to be headed back into ...