§-Unit

Unit 4: Managing the economy

5 dot points, in syllabus order. Each dot point has a focused answer, with exam-style questions and worked answers where available.

How are aggregate supply policies used to achieve the domestic macroeconomic goals?

The role of aggregate supply policies in achieving the domestic macroeconomic goals, including the rationale for supply-side policy, the major categories (training and education, infrastructure investment, innovation and R&D, immigration, competition and deregulation, tax reform), and the strengths and weaknesses

Aggregate supply policies. Identifies the six categories (training, infrastructure, R&D, immigration, competition, tax reform), explains the mechanism through which each shifts LRAS right, and reviews recent Australian supply-side policy including Future Made in Australia and the 2023 Productivity Commission inquiry.

9 min read →

The role of labour market reforms and immigration in influencing aggregate supply and the achievement of the domestic macroeconomic goals, including wages policy, enterprise bargaining, the Fair Work Commission, the National Employment Standards, and the size and composition of the migration program

Labour market and migration policy. Defines the Australian wage-setting system (awards, EBAs, individual contracts), identifies the Fair Work Commission's role, traces the migration program, and analyses recent reforms (Secure Jobs Better Pay, Closing Loopholes, the 2024 Migration Strategy).

8 min read →

How are aggregate demand policies used to achieve the domestic macroeconomic goals?

The role of budgetary (fiscal) policy in achieving the domestic macroeconomic goals, including the structure of the Commonwealth Budget, automatic stabilisers and discretionary changes, the budget outcome and the public debt, and the strengths and weaknesses of budgetary policy

Budgetary policy. Defines the Budget structure, distinguishes automatic stabilisers from discretionary changes, identifies the underlying cash balance and public debt, and analyses the strengths and weaknesses of budgetary policy with the 2024-25 Budget as the central case.

8 min read →

The role of monetary policy in achieving the domestic macroeconomic goals, including the cash rate as the policy instrument, the transmission mechanism, the stance of monetary policy, and the strengths and weaknesses of monetary policy

Monetary policy. Defines the RBA's role and inflation target, explains the cash rate mechanism, traces the four channels of the transmission mechanism, identifies the stance, and analyses the 2022-2024 tightening cycle.

8 min read →

How is the exchange rate determined and how does it affect the economy?

The determination of the exchange rate under a floating system, the factors that cause appreciation and depreciation, the effects of exchange rate movements on the domestic macroeconomic goals and on external stability, and the meaning and measurement of external stability

Exchange rates and external stability. Explains how a floating exchange rate is determined by demand and supply, identifies the factors causing appreciation and depreciation, traces the effects on growth, employment and inflation, and defines external stability through the current account and net foreign liabilities.

8 min read →