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ECON 211 Development Economics

tag 0 Download 3 Pages / 641 Words tag 13-07-2021

Question:

Information for Mock RBA meeting

Think about the current economic data and recent trends (using the sources listed below as a starting-point) that RBA members would use in making a policy recommendation. The data you consider should include leading economic indicators. At the most basic level, these would include unemployment and inflation rates and the consumer confidence index. Better presentations would also include other indicators of the strength of aggregate demand (such as housing and construction activity, retail sales, exports and imports, strength of foreign economies) and of aggregate supply (such as energy costs and productivity trends).

We recommend that you read the minutes of the most recent RBA Board meeting prior to your presentation and the media release on the day of the decision on the cash rate (sources below) to get an understanding of what data the RBA considers and how it uses the data.
In examining the data, you should think about what it means by itself and also how it fits in with other data to predict movements in aggregate demand and/or aggregate supply. If, for example, consumer confidence has decreased, you would consider this as a piece of evidence which, alongside other trends you identify, would allow RBA members to predict what might happen to aggregate demand in the future.

Keep in mind that this exercise involves the uncertainty of the real world. For example, if retail sales have been unusually low but domestic investment is growing, then you need to decide what these (opposing) events might mean for future aggregate demand. Keep in mind that there is not necessarily one right answer. In order to make an educated guess, think about all of the different variables and trends that your group considers important before making your decision.

Think more closely about how the data you have collected impacts the theoretical models we have talked about this semester (e.g. AD-AS and the Keynesian Aggregate Expenditure models). Then use these models to suggest what the central bank ought to do to the interest rate at the next meeting. For example, if you think that the AD and AS curves might move so that output falls below potential, then you might think that the central bank should lower the interest rate with the aim of boosting investment and therefore output.

1. What are the current external (foreign) conditions you think are relevant for deciding what to do to the cash rate?

2. What is the likely impact of these conditions on the AD curve?

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My Assignment Help (2021) ECON 211 Development Economics [Online]. Available from: https://myassignmenthelp.com/free-samples/econ211-development-economics/determinants-of-the-cash-rate-in-australia.html
[Accessed 28 January 2023].

My Assignment Help. 'ECON 211 Development Economics' (My Assignment Help, 2021) <https://myassignmenthelp.com/free-samples/econ211-development-economics/determinants-of-the-cash-rate-in-australia.html> accessed 28 January 2023.

My Assignment Help. ECON 211 Development Economics [Internet]. My Assignment Help. 2021 [cited 28 January 2023]. Available from: https://myassignmenthelp.com/free-samples/econ211-development-economics/determinants-of-the-cash-rate-in-australia.html.


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