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Essay / Research Paper Abstract
This 4 page paper considers how the performance of the Austrian economy between 1994 and 2004 can be examined with reference to the IS-LM model (Mundell-Fleming Model). The bibliography cites 5 sources.
Page Count:
4 pages (~225 words per page)
File: TS14_TEislmmun.rtf
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Unformatted sample text from the term paper:
fiscal policy a greater insight to the way in which they may manage an economy. The Australian economy is an unusual economy, unlike many others during the first couple of
years of the twenty-first century the economy did not suffer a recession despite this being seen in many other countries lead by the economic slow down in the US (Stevens,
2004). Like the UK part of the underlying reasoning is the increase in household debt and consumer confidence holding up the economy, but it is also argued that the expansionary
monetary polices have ;ed to this resilience and a healthy growth rate (Stevens, 2004). This expansionary policy has resulted in the need to increase interest rates to decrease the level
of disposable income in the economy to prevent high inflation and a boom and bust cycle (Reserve Bank of Australia Bulletin, 2004). Despite the changes in the last few
years, and indeed the last decade the Australian economy has had a steady rate of growth despite differing levels of unemployment and levels of capital investment. Under classical theories there
should be a move towards a single point of equilibrium with full employment, otherwise there would be a move towards this getting ever closer. However, looking at the IS-LM model
there is one explanation of how this can occur along with the various fluctuations in other currencies, such as the fall in the value of the US dollar, and the
circumstances seen in Australia. The following of a policy directly aimed at expanding the economy, shifting the LM curve to the right with the monetary policy and the IS
curve to the right with fiscal policies. It has been argued by Mankiw (2000) that fiscal expansion will not have any real impact on the economy through the trade balance.
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