Objectives
This assessment item relates to Unit Learning Outcomes 6 to 7 as listed in the unit profile.
Assessment Overview
This assessment task requires you to write an essay that demonstrates your theoretical and applied knowledge relating to the macro economy and stabilisation policy. It focuses on the macroeconomic section of the unit and builds on the
economic fundamentals that you learnt in the first half of the term. You will need a sound understanding of GDP,
economic growth, unemployment, inflation, macroeconomic stabilisation polices, particularly, fiscal policy. In this
essay, you will refer to the chapters outlined in the prescribed text book, relevant journal articles, various reports of the Australian government websites including the Treasury. The purpose of this assessment is to develop skills in
interpreting current macroeconomic indicators, analysing macroeconomic policies and their implications for the wider economy.
Assessment Topic
Discuss the current macroeconomic environment in Australia whilst critically evaluating the role of
fiscal policy as a stabilisation tool.
Background Information
Australia has experienced an unprecedented economic growth, achieving the longest economic expansion on
record (27 years) without recession. It also escaped the Global Financial Crisis and the end of the mining
boom relatively unscathed. These credentials hide some of the underlying structural issues lingering on in the
Australian economy. Among them are the stagnant wage growth rate, a sluggish economy, housing
affordability, rising household debt, a rapidly declining manufacturing sector, and concerns of job security
amidst of mass automation. In this economic environment, the role of macroeconomic policy cannot be
ignored. Particularly, the recent initiatives of income tax cuts and the Reserve Bank of Australia’s decision
to leave the official cash rate at its historic low of 1.5 per cent for over two years. In this essay, you will
discuss the recent trends of macroeconomic indicators and critically evaluate the role of fiscal policy
including its strengths and weaknesses as a stabilisation tool of a modern economy.
2
Detailed Instructions on the Structure of the Essay
1. Introduction
The introductory paragraph(s) should broadly outline the topic that will be discussed, explain why it is
important and a brief outline of the main sections that you will discuss in the remainder of the essay.
2. Body
The body of the essay contains the main sections. Please do not include the title ‘Body’ in your essay. You
may divide the body section into sub-sections by including sub-headings. You need to conduct research on
the current trend in economic growth, inflation rate, unemployment rate and other macroeconomic indicators
using multiple sources. As a minimum, you should:
• Provide an overview of current economic environment in Australia;
• Identify the stage of business cycle based on the latest economic indicators;
• Describe the macroeconomic goals;
• Define fiscal policy and its objectives. Identify various types of fiscal policy and with appropriate
diagrams, explain how they influence aggregate demand;
• Explain how the multiplier process works with respect to the proposed infrastructure spending in
Australia;
• Evaluate the current proposals for tax cuts and the supply-side effects of tax reform;
• Evaluate the forecasted budget surplus of the Federal Government and its influence on the
macroeconomy; and
• Discuss the limitations of using fiscal policy to stabilise the economy.
You are free to arrange the above sections as you wish and do not need to follow the same order. However,
your arguments and diagrams should be organised in a logical and coherent manner. You must also define key
terms before analysing them. In any economic analysis, it is good practice to follow the DADA principle –
Definitions, Assumptions, Diagrams and Analysis (Please do not include these as sub-headings).
All diagrams must be labelled and discussed in the text. Embedded JPEG files of hand-drawn diagrams are
acceptable and you must cite the source if your diagram is sourced from a published source. All definitions
and ideas obtained from published material must be appropriately referenced.
3. Conclusion
Conclusion should be an integrated summary of your main points. It should include a final statement that
reflects the research you conducted and your overall understanding of the topic. New material should not be
introduced into the concluding section.
4. References
All references should follow the APA style and reference list should include all the references that you have
cited in an alphabetical order.
Submission Details
All submissions must be via the Turnitin plagiarism detection system. Please tick the terms and conditions
box in order to submit your work properly. If your similarity index is too high, please make changes with
appropriate references and paraphrasing and resubmit. However, subsequent submissions take longer time to
display the similarity index, therefore submit your work early.