Meet Your Expert: Shabnam, Experienced Tutor, Economics Blog Contributor
Hi there! I’m Shabnam, a medical student, tutor, and regular blog contributor here on Learnmate. Alongside my studies, I’ve spent over a decade supporting students in subjects like mathematics, science, and economics—helping them make sense of complex ideas and succeed in their studies. I’ve always loved how Economics blends logic with real-world problem-solving, and in this blog, I’ll be breaking down key concepts to help you feel more confident and prepared.
Macroeconomic Policy in Australia: A Simplified Breakdown for Students
Macroeconomics might sound like a word reserved for finance experts in suits, but in reality, it affects every single one of us. Whether you're paying for your morning coffee, looking for a part-time job, or wondering why petrol prices seem to fluctuate more than your motivation to study, macroeconomic policies play a role.
So, if you're a student aiming to ace your economics exam (and impress your mates with some high-level economic banter), this guide is for you. We’re breaking down Australia’s macroeconomic policy, offering study techniques, and sharing some unique tips to help you smash your exams. Let’s dive in!
What is Macroeconomic Policy?
Macroeconomic policy refers to the strategies governments use to manage the overall economy. In Australia, these policies aim to achieve three major goals:
- Economic Growth – Increasing the nation’s output and improving living standards.
- Full Employment – Ensuring as many people as possible have jobs.
- Price Stability – Keeping inflation under control.
Australia’s government uses two main tools to achieve these goals:
- Monetary Policy (managed by the Reserve Bank of Australia, or RBA)
- Fiscal Policy (managed by the government through the annual Budget)
Monetary Policy: The RBA’s Secret Weapon
The Reserve Bank of Australia (RBA) is like the DJ of the economy, turning interest rates up and down to control inflation and economic activity.
- Expansionary Monetary Policy – When the RBA lowers interest rates to encourage borrowing and spending (great for businesses and first-home buyers!).
- Contractionary Monetary Policy – When the RBA raises interest rates to slow inflation and excessive spending (not so great for anyone with a mortgage).
Exam Tip: Make Monetary Policy Easy to Remember
Think of the RBA as a coffee shop:
- Lower interest rates = Happy hour! More people buy coffee (spend more).
- Higher interest rates = Price hike! Fewer people buy coffee (spend less).
Fiscal Policy: The Government’s Budgeting Superpower
Fiscal policy is all about government spending and taxation. Each year, the government sets a budget that can be:
- Expansionary – Increasing spending and cutting taxes to boost economic growth.
- Contractionary – Cutting spending and increasing taxes to slow down an overheating economy.
💡A Fun Way to Remember Fiscal Policy
Think of the government as a parent giving you pocket money:
- Expansionary policy – They’re feeling generous, so you get more money to spend.
- Contractionary policy – They’re tightening the budget, so no more extra cash for weekend plans.
Study Techniques to Score Top Marks
Understanding macroeconomic policy is one thing - writing top-tier answers in an exam is another. Here are some unique ways to study and succeed:
1. Use the Feynman Technique
Explain fiscal and monetary policy to a 10-year-old (or even your pet). If you can make it simple enough for them to understand, you truly know it!
2. Create Mnemonics and Acronyms
💡Remember MEFC:
- Monetary policy
- Expansionary = Lower interest rates
- Fiscal policy
- Contractionary = Higher taxes, lower spending
3. Practice Writing Responses Under Timed Conditions
Find past exam questions and write responses in 15-minute bursts. Always include real-world examples (e.g., how the RBA adjusted interest rates during COVID-19 to stimulate the economy).
4. Follow the News & Make Notes
Stay updated with ABC News or The Reserve Bank of Australia website. Not only will this impress your teacher, but it also makes your responses more relevant.
5. Use Case Studies
Examiners love case studies! For example:
- 2020 Pandemic Response: The RBA slashed interest rates to 0.1% to encourage economic activity.
- JobKeeper Program: The government spent billions to keep businesses afloat during lockdowns.
| Example Exam Response:
Question: Sample Answer: For example, during the COVID-19 pandemic in 2020, the RBA reduced the cash rate to a record low of 0.1% to stimulate economic activity. This expansionary approach helped businesses stay afloat and encouraged consumer spending. However, it also led to increased housing prices and, later, rising inflation. Conversely, in 2022, the RBA implemented contractionary monetary policy by raising interest rates to curb inflation, which had risen due to global supply chain disruptions. While this helped stabilise prices, it also increased mortgage stress for households. Overall, monetary policy is effective in managing economic growth and inflation, but it operates with time lags and is influenced by external factors such as global economic trends. |
Further Resources
For more insights into macroeconomic policy, check out:
- Reserve Bank of Australia (RBA) – Monetary Policy
- Australian Government Budget Overview
- ABC News – Economy Section
Need Extra Guidance?
If you found these tips helpful, I’d personally love to support you as your tutor this year. You can view my profile here on Learnmate and contact me to discuss tutoring.
Alternatively, you can also engage other Economics tutors on Learnmate to help you refine your extended response skills, boost your confidence, and receive tailored guidance to ace your WACE Economics exams.
