Essay plan for monetary policy (1 Viewer)

[hs17]

Explain how changes by the RBA in the stance of monetary policy can affect economic activity in Australia

Can someone suggest a quick plan to this essay question?

 

[sab13562]

Intro: Talk about RBA, policy objectives and briefly introduce monetary policy and its stances
Body : - Expansionary stance, how is it done? (policy corridor), impact on interest rates, mention how a decreased cash rate causes consumption and investment to increase. Then use AD formula to prove how that leads to AD and economic growth. Give eg of expansionary stance
-Monetary policy: Vice versa, pretty much same as expansionary except with opposite effect
-Limitations of mon pol: Eg time lag, global influences
Conclusion: sum up intro plus any other things you deem important which are mentioned in bodies.

In bodies, good to mention target band as well.

Good luck!

 

[nourished.]

I'd approach it with this:

• Separate paragraphs by different impacts;
• Eg economic growth, inflation, unemployment, exchange rate, etc.

In each paragraph,

• Talk about expansionary and give an example time period;
• Talk about contractionary and give an example time period.
• Remember to add graphs such as AD, demand-pull inflation, ER, etc.

Since it's not an evaluate question, you wouldn't need to put judgement words throughout. However, feel free to add an evaluative paragraph to add the finishing touches to the essay.