Now that you have developed an understanding of the policy tools that are available to address economic challenges, your task is to prepare material that will go towards a Policy Brief analysing Australia’s economic recovery from the COVID pandemic and building an equitable and resilient economy in the future. Imagine you are now employed as a Graduate Economist working for the Australian Treasury. Your team is responsible for putting together a Policy Brief for the department that summarises some key aspects of the government’s policy responses to the COVID-19 recession and provides policy analysis to strengthen Australia’s economy in the future. You have a very important job! Your task is to provide clear answers to the following queries that have been requested from your department manager, using the knowledge and skills that you have gained from your macroeconomics course. The Australian Bureau of Statistics (ABS) reports that the household saving ratio in Australia increased notably during the pandemic. The following chart and table from the ABS illustrate how the fraction of income saved by households increased during the pandemic. (See ABS chart and table below) Your team of economists are discussing whether an increase in the saving ratio would strengthen, or weaken, or have no effect on the size of the fiscal multiplier? Explain your response to this question, and your economic explanation why. (2-3 sentences) Saving ratio of Australian households (Quarterly data from December 2019 to December 2022) Quarter Dec 2019 Mar 2020 Jun 2020 Sep 2020 Dec 2020 Mar 2021 Jun 2021 Sep 2021 Dec 2021 Mar 2022 Jun 2022 Sep 2022 Dec 2022 Saving ratio (%) 6.8 9.3 23.6 20.6 14.4 14.0 11.7 19.3 12.9 11.2 8.3 7.1 4.5 Source: ABS, Australian National Accounts: National Income, Expenditure and Product. https://www.abs.gov.au/statistics/economy/national-accounts/australian-national-accounts-national-income-expenditure-and-product (Accessed May 2022) Source: ABS, Australian National Accounts: National Income, Expenditure and Product. https://www.abs.gov.au/statistics/economy/national-accounts/australian-national-accounts-national-income-expenditure-and-product (Accessed May 2023)
Now that you have developed an understanding of the policy tools that are available to address economic challenges, your task is to prepare material that will go towards a Policy Brief analysing Australia’s economic recovery from the COVID pandemic and building an equitable and resilient economy in the future.
Imagine you are now employed as a Graduate Economist working for the Australian Treasury. Your team is responsible for putting together a Policy Brief for the department that summarises some key aspects of the government’s policy responses to the COVID-19 recession and provides policy analysis to strengthen Australia’s economy in the future. You have a very important job!
Your task is to provide clear answers to the following queries that have been requested from your department manager, using the knowledge and skills that you have gained from your
- The Australian Bureau of Statistics (ABS) reports that the household saving ratio in Australia increased notably during the pandemic. The following chart and table from the ABS illustrate how the fraction of income saved by households increased during the pandemic. (See ABS chart and table below)
Your team of economists are discussing whether an increase in the saving ratio would strengthen, or weaken, or have no effect on the size of the fiscal multiplier? Explain your response to this question, and your economic explanation why. (2-3 sentences)
Saving ratio of Australian households (Quarterly data from December 2019 to December 2022)
|
Quarter |
Dec 2019 |
Mar 2020 |
Jun 2020 |
Sep 2020 |
Dec 2020 |
Mar 2021 |
Jun 2021 |
Sep 2021 |
Dec 2021 |
Mar 2022 |
Jun 2022 |
Sep 2022 |
Dec 2022 |
|
Saving ratio (%) |
6.8 |
9.3 |
23.6 |
20.6 |
14.4 |
14.0 |
11.7 |
19.3 |
12.9 |
11.2 |
8.3 |
7.1 |
4.5 |
Source: ABS, Australian National Accounts:
Source: ABS, Australian National Accounts: National Income, Expenditure and Product. https://www.abs.gov.au/statistics/economy/national-accounts/australian-national-accounts-national-income-expenditure-and-product (Accessed May 2023)
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