Inflation Essay (1 Viewer)

[Haku]

we got this assessment task on inflation

discuss the economic costs of inflation and examine the effectiveness of the australian govts attempt to control the inflation.

we have to discuss on this quote "we believe that low inflation is a necessary condition for sustainable economic growth"


besides the use of monetary policy to control inflation, what other policies does the govt imploy to control inflation? and how effective they are?
and how do i incorporate the quote into the essay answer.?


thanks for any help

 

[monique66]

the RBA uses pre-emptive monetary policy (i.e. they raise i/rates if they expect inflation to rise in the future) and the govt uses microeconomic policies (for example, the Howard govt introduced enterprise bargaining so that wage growth is only linked to an increase in productivity. Another reform may include the reduction in tariffs making out labour market more intl competitive, etc)- That should all be in your textbook

I'd say that these policies have been effective in reducing inflation as it has been keep between the band of 2-3% (except in 2000 because of the GST) This has also helped us maintain a sustainable level of economic growth. I suppose its more a matter of opinion to whether or not they have been effective.

And in terms of the quote, you have to DISCUSS the quote, not include it (unless your teacher said otherwise). I'm pretty sure what you have to do is use the quote as a basis for your discussion.

 

[aka_bomber]

besides the use of monetary policy to control inflation, what other policies does the govt imploy to control inflation? and how effective they are?QUOTE]

what about the fiscal policy?

 

[monique66]

besides the use of monetary policy to control inflation, what other policies does the govt imploy to control inflation? and how effective they are?QUOTE]

what about the fiscal policy?

to a lesser degree..i'd say that perhaps a contractionary fiscal stance would reduce inflation but that is not its main objective..

 

[aka_bomber]

lol ok thanks

 

[Haku]

why is a low inflation rate neccerry for economic growth to occur?

 

[yoshimanu]

why is a low inflation rate neccerry for economic growth to occur?

A low inflation means prices of goods are lower... which increases how competitive the country is.... so in the long term the country should experience economic growth