• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Economic growthis refers to the increase in real GDP per capita in one year. Economic growthis a key economic objective of any Australian government. However sustainedeconomic growth is concerned with continuing this economic growth for a longerper...

Extracts from this document...

Introduction

Economic growth is refers to the increase in real GDP per capita in one year. Economic growth is a key economic objective of any Australian government. However sustained economic growth is concerned with continuing this economic growth for a longer period of time. The Australian government can implement a range of policies (instruments that will bring a change in the economy) to promote sustained economic growth, on a micro (industry/area specific) or a macro (whole economy) level. Macroeconomic (macro) management is concerned with stabilising the aggregate level of economic activity. The two arms of macro management are Monetary Policy (MP; RBA control of interest rates to influence cost and availability of credit) and Fiscal Policy (FP; The federal budget). Implementations of these macro policies only serve to influence and effect individual actions in the short-term. Both policies however fail to address the promotion of sustained economic growth ie: growth in the long-term. MP and FP are used to stabilise the level of economic activity, playing a reactive role by not striving to direct the original promotion of economic growth. MP is directed towards controlling largely the effect of inflation in Australia, once again a reactive role. In addition, FP uses various balances of taxation and government spending to influence the economy, with concerns only truly for the short-term as FP is an annual commitment of any government. ...read more.

Middle

With this decrease in price and improved allocation of resources only efficient businesses in the market survive - ensuring that there is a higher aggregate supply and thus sustained economic growth (refer back to figure 1.2). Deregulation of both the financial markets and foreign investment regulations have proven this to be the case. In deregulating both markets there has been an increase in competition - largely from overseas firms. This deregulation opened up the opportunity to borrow from overseas and to fund long-term projects that would generate employment etc in the future. Though we increase overseas debt levels through this deregulation, and more of our money (income and savings) goes overseas, we still benefit in the long-term through this micro policy through the essential increase in competition leading to an allocation of efficient resources. We gain a long-term increase in efficiency and productivity of banks and sources of funds, which assist in promoting sustained economic growth in the Australian Economy. The micro policies of Privatisation ("Assets Sales" in budgetary policy - shifts controls from public sector to private sector then becomes part of micro management) and Corporatisation in Australia result in Australian businesses becoming much more efficient. The biggest impact is resources being allocated to more efficient individuals as opposed to inefficient government practices. ...read more.

Conclusion

Evidence of the success of Australia introducing micro policies in the eighties is emerging now, nearly a decade after implementation. Measurement of the productivity levels of Australia pre micro policy and post micro policy can be compared to show that micro management though slow does ensure sustained economic growth. The rate of productivity grew at an average rate of 0.8% in the 1980s whereas the average rate of productivity increased to 1.6% in the early 1990s (post recession). The Industry Commission suggests that the most important factor to contribute to this improvement is the reform of public utilities - testament to the fact that micro policies promote sustained economic growth. The Howard Coalition of 1996 to present has been criticised for not implementing a sufficient amount of micro policies but rather choosing to focus largely on macro policies. This criticism is made because it's been noted that micro policies and micro management are truly the catalyst for sustained economic growth with the greater part of macro policies being used to stabilise the aggregate level of economic activity in the short-term. If the Howard government, or any government of Australia wishes to promote sustained economic growth in the Australian Economy they must implement forms of both macro and micro policies but with an enhanced focus on microeconomic management. Preston Patrick Year 12 Economics (McQ) ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our GCSE Economy & Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related GCSE Economy & Economics essays

  1. Was the Nazi economic policy a success or failure?

    By 1944 41.5% of workforce was women. In January 1943 the German army surrendered at Stalingrad and the tide of the war changed. In September Speer was appointed Reich Minister for Armaments and Production. This gave him responsibility for all industrial output and raw materials and into these areas of the economy he introduced reorganization and rationalization.

  2. Do We Need Government Intervention To Ensure An Efficient Allocation of Resources?

    This kind of service is non-rival in normal conditions but just in the case of a mass town-wide fire would it become a rival service. Public goods are different from merit goods, as merit good are private goods but those which have external benefits whose consumption is promoted by the state.

  1. China and Economic growth, Case Study

    Unemployment Unemployment in China has been classed as a major economic problem. This is due to the GFC causing the unemployment rate to rise from 4% in 2002 to 5% in 2009; however this does not take into account the estimated 10 million workers who were made redundant.

  2. Supply side policies and its economic impact.

    Trade union typically aim to achieve higher wages and make sure that condition for workers are sound, and improving within their particular industry. If the government aims to reduce trade union power then this will hugely advantage the industry. Other supply side policies such as reducing unemployment benefits have not been used very much in the U.K.

  1. An Empirical Investigation into the Causes and Effects of Liquidity in Emerging

    Finally, the cross-liquidity effects of each type of debt are examined, by noting how the bid-ask spreads on one type of debt affect the bid-ask spreads on the opposing asset class. The intuition behind this is that if EME debt is liquid then investors will convert to holding this type of debt and vice versa with US corporate debt.

  2. "If real world markets can be made to resemble more closely the model of ...

    Now, it is as simple as logging onto the Internet, performing a search and ordering the product. The process of finding and ordering the product has been greatly reduced in cost for the consumer, now that the Internet is in place.

  1. Discuss the policy options the Australian Government can use to achieve external stability

    The BOGs has seen a dramatic turnaround from $0.3 billion surplus in 2000-01 to a $10.8 billion deficit in 2002. Australia's strong growth has lead to increased spending on imported goods and services. Australia's Net Foreign Liabilities (NFL) is a longer term measure of Australia's external position, reflecting Australia's total

  2. The costs and benefits of economic growth.

    The key is whether the gains from a growing economy filter through to a sufficiently large percentage of the population The fiscal dividend from economic growth With economic growth comes a fiscal dividend. Unemployment is likely to decline, although as Okun's law says only if productivity is growing at a

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work