Question

In: Economics

summarize, and display your grasp of the economic ideas that are present and your recognition of...

summarize, and display your grasp of the economic ideas that are present and your recognition of any obvious disagreements between materials. Your paper should be grammatically correct, and it should display evidence that you completed the reading and understood the material.

Solutions

Expert Solution

Multiple economic theories have failed and strongly the wrong data availability of Macroeconomic variables can cause higher negative implications for government and Reserve bank of Australia to figure out right policy. However experts say negative implications are minimal, but in reality negative implications are way beyond imagination when available data is incorrect and thus decisions made are cumbersome.

An incorrect scenario has huge economic implications for example if debt to GDP ratio is found high and unemployment too is high, the government may incurr higher fiscal stimulus packages and lower interest rates by RBA which all lead to inflation ajd higher fiscal deficit.

However if correct figures are obtained then a combination of expansionary monetary policy by RBA through reduced interest rates- CRR- SLR rates and bond buying programmes as well as expansionary fiscal policy by reducing taxes and inducing higher spending will all lead to lower unemployment, higher money supply, higher investment and consumption, higher aggregate demand and thus ultimately growth in economic outputs or real GDP and prices in long run scenarios.

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