Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Question 1 a) The following article was published in Australian Financial Review 2021. Read this excerpt to answer the question given below. Budget could

image text in transcribed

Question 1 a) The following article was published in Australian Financial Review 2021. Read this excerpt to answer the question given below. Budget could bring forward RBA rate rises, UBS says Monetary policy William McInnes Upbeat Nominal GDP (% YoY) FORECAST FY21MYEFO FY08 FY12 FY16 FY20 FY24 10 2 SOURCE UBS The larger than expected fiscal stimulus in Treasurer Josh Frydenberg's budget could force the Reserve Bank of Australia to bring forward its rate hike plans as the economy and the labour market are jolted back to life. More stimulus from the government and an upgraded near-term economic outlook suggest the RBA will need to reduce bond purchases under its quantitative easing program before the end of this year and may need to lift rates ahead of its own guidance of 2024 at the earliest. "The persistence of stimulus - for several years ahead despite approaching NAIRU will put upward pressure on wages and inflation," said UBS chief economist George Tharenou. NAIRU is the non-accelerating inflation rate of unemployment. i) ii) Based on your understanding of Government's macro-economic policies, identify two possible economic stimuli that the treasurer might have announced? Briefly explain why the chief economist of UBS thinks larger than expected economic stimulus announced in the budget might affect RBA's future interest rate decisions?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Intermediate Financial Management

Authors: Brigham, Daves

10th Edition

978-1439051764, 1111783659, 9780324594690, 1439051763, 9781111783655, 324594690, 978-1111021573

More Books

Students also viewed these Finance questions