Fiscal and Monetary Policy and Economic Fluctuations

Before the economic recession, the world economy was relatively good over five years ago. Meanwhile, the US economy peaked in the fourth quarter of 2007, in particular. However, following that, a mild economic recession continued in early 2008, which eventually turned into a serious global credit crisis in about a year. . Although only a few countries have left the recession, there are no countries (Norris, 2012) that can actually avoid the serious bear market of the stock market.

The main objective of fiscal and monetary policy is to reduce cyclical fluctuations in the business cycle. In recent years, the government has often relied on monetary policy aimed at low inflation. But during the economic downturn there are good reasons to believe that fiscal policy can be used to achieve economic recovery. After the British recession in 1992, interest rate reduction (depreciation of pound overestimation currency) was very effective in achieving economic growth. Because the economic recession in 1992 was mainly due to high interest rates, by lowering interest rates you can reduce the burden on homeowners and companies and revitalize the economy.

Fiscal and monetary policy are important for economic growth and national development. However, fiscal policy and monetary policy have different uses, advantages and disadvantages. Fiscal policy is useful to the country by collecting funds and rights. If fiscal policy fails, it also affects the company's monetary policy. On the other hand, monetary policy does not talk about growth and development, its main objective is to ensure adequate liquidity, then suppress inflation and reduce unemployment. Fiscal policy and monetary policy have their own goals, and as the economy grows, both fiscal policy and monetary policy should be formed properly.

With major macroeconomic policies of monetary and fiscal policy, the Australian government can manipulate total demand to achieve economic goals. As shown, macroeconomic policy is trying to smooth fluctuations in the short-term to medium-term business cycles by affecting the aggregate demand level. However, as it is difficult to achieve at the same time, the government needs to prioritize these goals. Ecological growth has improved living standards and indirectly reduced unemployment. Both macroeconomic policies will ensure the trust of the international economy necessary to stabilize the Australian dollar and the external balance.