Economic Policies and Management Flashcards
(25 cards)
What are the six main economic objectives of government policy?
Economic growth, full employment, price stability, external stability, income distribution, environmental sustainability
What does economic growth aim to achieve?
Increase the productive capacity of the economy and raise living standards
What does full employment mean?
A situation where everyone who wants a job and is able to work can find employment
Why is price stability important?
To maintain the purchasing power of money and avoid distortions in the economy
What does external stability refer to?
A sustainable level of international transactions and a stable exchange rate
How does income redistribution improve equity?
It ensures fairer access to opportunities and resources for all individuals
What does environmental sustainability involve?
Meeting current needs without compromising future generations’ ability to meet theirs
What is the aim of fiscal policy?
To manage economic activity through government spending and taxation
What are the main outcomes of the federal budget?
Surplus, deficit, balanced
What are common methods of financing a budget deficit?
Borrowing, use of savings, sale of government assets
What is the purpose of monetary policy?
To influence aggregate demand by adjusting interest rates
How does the RBA implement monetary policy?
By setting the cash rate which influences market interest rates
What happens when interest rates are increased?
It discourages borrowing and spending, reducing inflationary pressure
What are microeconomic policies designed to improve?
To improve resource allocation, productivity and competitiveness
What is deregulation?
The removal of government controls and restrictions in markets
What is competition policy?
A set of laws to promote market competition and prevent monopolies
What is economic efficiency?
Maximising output from given inputs and minimising waste
What are labour market policies used for?
To regulate employment conditions and support workforce participation
What are minimum employment standards?
Conditions such as minimum wage, leave entitlements, and safety standards
What are enterprise agreements?
Contracts between employers and employees over pay and conditions
What are market-based environmental policies?
Policies that use incentives like taxes or subsidies to influence behaviour
What are examples of national or global environmental agreements?
Kyoto Protocol, Paris Agreement, Emissions Reduction Fund
Why do time lags affect policy effectiveness?
Because the effects of policies take time to influence the economy
How do global influences limit economic policy?
Global markets, interest rates, and trade conditions affect policy outcomes
