Haha yep I did monetary policy. I couldn't be bothered drawing the Keynesian cross diagram cos i didn't have a ruler haha (used the side of my calculator for exchange rates!)
Intro: Monetary policy is a macroeconomic policy that involves action by the Reserve Bank of Australia (RBA), on behalf of the government, to influence the cost and availability of money and credit in the economy. The main objectives of monetary policy, as stipulated in the Reserve Bank Act 1959, are price stability, full employment and economic growth, which are pursued through its main economic instrument: domestic market operations (DMO). Since 1993, monetary policy has focused primarily on achieving a sustainable level of inflation of 2-3% on average over the course of the economic cycle. By affecting the cash rate and thus the level of aggregate demand in the economy (C+I+G+[X-M]), the RBA has effectively managed inflation and consequently, many other economic objectives. Monetary policy can also affect unemployment, as labour is a derived demand from the demand for goods and services (AD). Whilst the goals of price stability and full employment are seen to conflict, recent monetary policy has shown Australia's effectiveness at achieving these goals simultaneously.
Something like that for intro. My teacher always says hit them hard haha cos they read shitloads of these things - so i always chuck detail in there. Can't remember my structure that well but basically:
Para 1: How it is implemented by the RBA on behalf of the government, quick to implement but time lags, influences aggregate demand
para 2: DMO --> explanation of ES accounts, how it can tighten or loosen policy...just the whole explanation of that
Para 3: whole concept of inflation targeting, why it does this (monetary policy is best at targeting one objective) why it's important (i.e. why inflation is shit) --> not sure this may have been two paras but whole theory behind why it seeks to affect inlfation
para 4: how it brings together DMO and need to maintain inflation i.e. explanation of transmission mechanism when inflation gets too high (or looks like it's gonna get high), examples of when they did this e.g. when GST was implemented, during resources boom, post-GFC
para 5: BUT it also can target unemployment --> it's second objective under the RBA act 1959. Explanation of transmission mechanism for employment i.e. it affects aggregate demand, labour is a derived demand and therefore by stimulating growth it stimulates lower unemployment e.g. during the GFC where it cut rates to 25 year lows in order to stimulate growth which meant we only peaked in unemployment at 5.8% unlike the US which got above 10% or something....and i always like to mention that it's not just monetary that did this but also fiscal - it's little macroeconomic friend haha with the 59.4billion stimulus package or something can't remember the figure atm but i knew it then haha.
para 6: competing objectves --> some say that inflation and unemployment are competing objectives, explanation of that e.g. unemployment needs growth but growth may = inflation due to demand-pull inflation....all that crap. the NAIRU etc....and how we can't stimulate employment beyond NAIRU cos it causes inflation. But then i said how this hasn't happened in Australia since the 1990s and inflation targeting and how the phillips curve is stupid. because it is. But i said it in a nice way so as to not offend Phillip.
conclusion: clearly monetary can affect inflation and unemployment but also mentioned here about how to maintain these dual objectives we have to use micro policies to lower the NAIRU and reduce supply constraints so as to increase the sustainable growth level which should manage inflation and unemployment, and it needs fiscal because they're good buddies.
