Out of Questions 1 and 2, you are required to extend response on ONLY ONE. In answering the question you are expected to define and provide explanations relevant to the topic.

Essay Question 1: Monetary Policy

Identify the economic circumstances when an easy monetary policy is applied by the RBA and explain how this type of monetary policy might affect exchange rates, employment and inflation. (refer to the current economic circumstances in your answer)

Essay Question 2: Fiscal Policy

Explain how an expansionary fiscal policy might affect the economy in terms of economic growth, employment and inflation. (refer to current expansionary fiscal policy examples in your answer)