Goals of Government Economic Policy

The free market economy is ​ ​ (a)  

• highly unstable

• unpredictable

• relatively stable (ceteris paribus)

• relatively unstable

• relatively unstable (ceteris paribus)

Large fluctuations in economic activity are characterised by ​

• high unemployment

• the strength of the AUD

• counter-cyclic policies

• responsive government intervention

Macroeconomic management is

• the use of fiscal, monetary, income and foreign policy to increase the fluctuations in economic growth.

• the use of federal macroeconomic policies to reduce the severity of fluctuations in the level of economic activity.

• the use of government policies to increase the external stability of a nation

• the use of federal policies to achieve maximum economic growth at all costs

Four important observations about macroeconomic management are:

1. The use of counter-cyclical policies

2. Macro policies have microeconomic effects

3. The govt will use micro policies which are ​__________

​

• reallocative & redistributive

• economic goals

• counter-cyclical

• in isolation to macroeconomic objectives

• microeconomic theory

What is the name of the policy which deals with interest rates, inflation and unemployment?

(a)  

What is the name of the macroeconomic policy which deals with the foreign sector?

(a)  

What is the name of the macroeconomic policy which deals with taxes and govt spending?

(a)  

There are four types of macro economic policies: fiscal, monetary, external and

• economic growth policy

• inflation policy

• unemployment policy

• prices and income policy

When the government employs a particular combination of fiscal, monetary, prices and incomes and external policies, it is called a

• policy mix

• policy combo

• dog's breakfast

• policy position

Large fluctuations in economic activity are also characterised by ​

• rapid inflation

• the strength of the AUD

• counter-cyclic policies

• responsive government intervention