5.2 - The Fiscal and Monetary Policy Flashcards
What is the Fiscal Policy?
The Fiscal Policy is used to adjust the economy to a desired level where prices are steady, the employment level is satisfactory, and where there is potential growth.
Who is responsible for the Fiscal Policy?
The Australian Government
What are the three ways the Fiscal Policy improves living standards (TTW)?
The three ways are:
- Taxation
- Training & Workforce Development
- Work Visas & Migration
What are three examples the Fiscal Policy improves living standards VIA tax (GIM)?
Three examples:
- GST (Goods & Services Tax)
- Income Tax
- Medicare Levy
What are the two reasons on why tax is important?
- To reduce differences in wealth
- Tax provides money for the development of hospitals, education, transport, pensions, grants and etc.
Why does the Fiscal Policy need to improve living standards VIA training and workforce development?
Highly skilled and flexible workers can improve Australia’s productivity and international competitiveness.
What are three ways the Fiscal Policy improves living standards VIA work visas & migration?
- The skilled migration program targets potential immigrants with skills and abilities
- The program is permanent
- The immigrant can permanently live in Australia
What is the temporary skill shortage visa (TSS visa) and how long does it last for?
The temporary skill shortage visa (TSS visa) supports businesses that have skill shortages in their workforce. It lasts for 2-4 years.
What is the Monetary Policy?
The monetary policy encourages strong and sustainable growth in an economy by changing the cash rate, therefore influencing interest rate.
What are the 4 purposes of the monetary policy (IPIC)?
4 purposes of monetary policy
- To control Inflation
- To preserve the value of money
- To manage Interest Rate
- To control the money supply (e.g. print money)
Who is responsible for the Monetary Policy?
The Reserve Bank of Australia (or RBA)
