Identify and describe the sources of economic growth in the Australian economy. And evaluate the effectiveness of fiscal policy as a weapon for pursuing economic growth.
Economic growth refers to the ability of the economy to produce a sustained increase in goods and services over time as measured by changes in real GDP. The adoption of Keynesian economic theory in the 1930’s saw acceptance that level of economic activity in an economy is determined by aggregate or total demand. In 1998 the Asian financial crisis, including some of Australia’s trading partners, Furthermore the world economy experienced largest downturn since great depression coming from the GFC in 2008-2009- prospects of GFC 2. In Australia economic growth sustained throughout and since the global financial crisis. Sources of economic came from components of AD= C+I+G+X-M, with importance G in GFC.
Sources of economic growth can from components of AD=C+I+G+X-M, as a globaliser, it is also of significance to know that Australia has benefitted from trade, FDI and financial flows. China’s high growth rate has seen mineral exports contribute to economic growth Economic growth has been uneven (>10% in Western Australia. /2-3% in east coast- speed economy. In Australia, private consumption expenditure is the largest component of demand by far and provides approximately 60 per cent of all spending in the economy.Government policies include two macroeconomic policies (Fiscal and Monetary)- interest rates, Government spending, investment allowances and rebates.
Macroeconomic policies are Government policies that are used to influence the level of economic activity. Governments have at its disposal two macroeconomic policy weapons, one being fiscal policy and the other, monetary policy. The effectiveness of fiscal policy as a macro-demand management weapon is apparent by the fact that it replaced monetary policy which was the Government’s other demand management weapon, as the...
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