unmentionable
Member
i cant seem to think of one 
-
YOU can help the next generation of students in the community! Share your trial papers and notes on our Notes & Resources page
An advantage of using monetary policy to manage the economy (1 Viewer)
- Thread starter unmentionable
- Start date
tWiStEdD
deity of ultimate reason
dude, its demand management.
- can ease inflationary demand push pressures
- slow credit growth
- contract the economy through diminished demand
its a 'blunt' economic weapon, but it is also effective.
- can ease inflationary demand push pressures
- slow credit growth
- contract the economy through diminished demand
its a 'blunt' economic weapon, but it is also effective.
unmentionable
Member
oh i overlooked the obvious -.-
thanks
thanks
ToO LaZy ^*
n/a
nope..tis an 04er..Rorix said:
unmentionable: oh and btw, how did you find my china essay?..i couldn't put in the graphs coz the file would;ve been too big
Monetary policy is faster to implement than fiscal policy. i.e. the RBA meets monthly to decide the cash rate, whereas the government will only have one budget per year (or also a mini-budget, but this rarely happens).
Secondly, as the RBA is independent of the government, monetary policy should theoretically be free from government intervention or politicking, unlike fiscal policy which can be highjacked by the electoral cycle (i.e. the government spends a lot in an election year to win over voters, regardless of the current state of the economy).
Secondly, as the RBA is independent of the government, monetary policy should theoretically be free from government intervention or politicking, unlike fiscal policy which can be highjacked by the electoral cycle (i.e. the government spends a lot in an election year to win over voters, regardless of the current state of the economy).
mushroom_head
holey moley!
but fiscal policy is implemented throughout the course of the 12months, not just during the time when the budget is issued right? did u mean fiscal policy have longer time lags? that's what my teacher said.
by the way, how long is it before we see the effect of monetary policy after it's implemented?
by the way, how long is it before we see the effect of monetary policy after it's implemented?
ToO LaZy ^*
n/a
no no no...i think he means that fiscal takes longer to implement, but has a shorter time lag.
monetary on the other hand, can be implemented faster than fiscal, but has a time lag of around 6-18 months until the effects of the policy show up in the economy.
monetary on the other hand, can be implemented faster than fiscal, but has a time lag of around 6-18 months until the effects of the policy show up in the economy.
Wild Dan Hibiki
teh sex0r
- Joined
- Feb 28, 2004
- Messages
- 649
- Gender
- Undisclosed
- HSC
- 2004
monetary policy has a time lag if memory serves correctly
ToO LaZy ^*
n/a
that is correct.
mushroom_head
holey moley!
Really?....how?ar5ena1 said:
If you go and have a look at the RBA website:mushroom_head said:
http://www.rba.gov.au/MonetaryPolicy/about_monetary_policy.html
Find : "lag"
And I believe the reasoning goes back to a Friedman theory.
What I meant was that the RBA can change monetary policy at more regular intervals than the government can change fiscal policy (i.e. once/month versus once/year, respectively). Thus, monetary policy can be changed more often to reflect the anticipated economic conditions, giving it an advantage over fiscal policy in that respect. I realize monetary policy has a 6-18 month lag period, which is why the RBA takes into consideration economic forecasts. What I wrote before wasn't about the impact time of monetary and fiscal policy, but rather the speed at which the RBA can raise/lower the cash rate versus the time for the government to compile a new budget.ar5ena1 said: