The effect of public expenditure on inflation in Australia and New Zealand
Order ID |
53563633773 |
Type |
Essay |
Writer Level |
Masters |
Style |
APA |
Sources/References |
4 |
Perfect Number of Pages to Order |
5-10 Pages |
Description/Paper Instructions
The effect of public expenditure on inflation in Australia and New Zealand
Public expenditure refers to the government’s spending on various goods and services. It is one of the key components of fiscal policy, which is used by governments to achieve economic objectives such as controlling inflation, stimulating economic growth, and reducing unemployment. Inflation, on the other hand, refers to the increase in the general price level of goods and services over time. In this essay, we will discuss the effect of public expenditure on inflation in Australia and New Zealand.
The Effect of Public Expenditure on Inflation in Australia
In Australia, the government’s public expenditure has a significant impact on inflation. This is because public expenditure can lead to an increase in the demand for goods and services, which, in turn, can lead to an increase in prices. For example, if the government spends more money on infrastructure projects, such as roads and bridges, it will increase the demand for construction materials, labor, and other inputs. As a result, the prices of these inputs will increase, and this will ultimately lead to an increase in the prices of goods and services that use these inputs.
Furthermore, the government’s public expenditure can also lead to an increase in the money supply, which can fuel inflation. When the government spends more money, it injects more money into the economy, and this can lead to an increase in the money supply. If the increase in the money supply is not accompanied by an increase in the supply of goods and services, it can lead to an increase in the general price level of goods and services.
However, it is worth noting that not all types of public expenditure have the same impact on inflation. For example, public expenditure on education and healthcare may not lead to an increase in the demand for goods and services in the same way that public expenditure on infrastructure does. Therefore, the impact of public expenditure on inflation in Australia will depend on the type of expenditure and the specific circumstances in which it is made.
The Effect of Public Expenditure on Inflation in New Zealand
In New Zealand, the relationship between public expenditure and inflation is more complex. Unlike Australia, New Zealand operates under a monetary policy framework that aims to keep inflation within a target range of 1-3%. This means that the Reserve Bank of New Zealand has a mandate to use interest rates to achieve its inflation target, and public expenditure is just one of the factors that can influence inflation.
In New Zealand, the government’s public expenditure can influence inflation through several channels. First, public expenditure can lead to an increase in the demand for goods and services, as in Australia. However, unlike Australia, the Reserve Bank of New Zealand can respond to this by adjusting interest rates to reduce demand and prevent inflation from rising above its target range.
Second, public expenditure can also lead to an increase in the money supply, which can fuel inflation. However, the Reserve Bank of New Zealand can again respond to this by adjusting interest rates to tighten monetary policy and reduce the growth of the money supply.
Finally, public expenditure can also have an indirect effect on inflation by influencing expectations about future inflation. For example, if the government increases its spending on infrastructure, it may signal to businesses and consumers that it expects the economy to grow, and this may lead to an increase in inflation expectations. However, the Reserve Bank of New Zealand can also respond to this by adjusting interest rates to anchor inflation expectations and prevent them from becoming too high.
Conclusion
In conclusion, public expenditure can have a significant impact on inflation in both Australia and New Zealand. However, the relationship between public expenditure and inflation is more complex in New Zealand due to its monetary policy framework. In both countries, the impact of public expenditure on inflation will depend on the specific circumstances in which it is made and the type of expenditure.
The effect of public expenditure on inflation in Australia and New Zealand
RUBRIC
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Content (worth a maximum of 50% of the total points) |
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30 points out of 50: The essay illustrates a rudimentary understanding of the relevant material by mentioning but not full explaining the relevant content; identifying some of the key concepts/ideas though failing to fully or accurately explain many of them; using terminology, though sometimes inaccurately or inappropriately; and/or incorporating some key claims/points but failing to explain the reasoning behind them or doing so inaccurately. Elements of the required response may also be lacking. |
40 points out of 50: The essay illustrates solid understanding of the relevant material by correctly addressing most of the relevant content; identifying and explaining most of the key concepts/ideas; using correct terminology; explaining the reasoning behind most of the key points/claims; and/or where necessary or useful, substantiating some points with accurate examples. The answer is complete. |
50 points: The essay illustrates exemplary understanding of the relevant material by thoroughly and correctly addressing the relevant content; identifying and explaining all of the key concepts/ideas; using correct terminology explaining the reasoning behind key points/claims and substantiating, as necessary/useful, points with several accurate and illuminating examples. No aspects of the required answer are missing. |
Use of Sources (worth a maximum of 20% of the total points). |
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15 out 20 points: Credible Scholarly sources are used effectively support claims and are, for the most part, clear and fairly represented. APA 6th Edition is used with only a few minor errors. There are minor errors in reference and/or citations. And/or there is some use of questionable sources. |
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7 points out of 10: Research paper presents an above-average use of formatting skills. The paper has slight errors within the paper. This can include small errors or omissions with the cover page, abstract, page number, and headers. There could be also slight formatting issues with the document spacing or the font Additionally the paper might slightly exceed or undershoot the specific number of required written pages for the assignment. |
10 points: Student provides a high-caliber, formatted paper. This includes an APA 6th edition cover page, abstract, page number, headers and is double spaced in 12’ Times Roman Font. Additionally, the paper conforms to the specific number of required written pages and neither goes over or under the specified length of the paper. |
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