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Microeconomic policies

In this topic you will learn to:

Examine economic issues
  • analyse the opportunity cost of government decisions in addressing specific economic problems or issues
  • investigate structural changes in the Australian economy resulting from microeconomic policies
​
Apply economic skills​
  • explain how governments are restricted in their ability to simultaneously achieve economic objectives
​

You will learn about:

Microeconomic policies
  • rationale for microeconomic policies including shifts in aggregate supply, efficiency
  • effects of microeconomic policies on individual product and factor markets, individual industries and the economy
  • regulation and deregulation – competition policy

​
Microeconomic reform aims to boost productivity growth by creating an environment in which resources are allocated to their most productive uses and firms use the most efficient methods of production.

Reference: 
https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/rp/RP9697/97rp19#MICRO​ 

What types of questions can you expect?

pages_from_2020-hsc-economics_microeco_reform.pdf
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pages_from_2020-hsc-economics-mg_microeco_reform.pdf
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Microeconomic policies
These questions typically require you to know these three important aspects of microeconomic policy:
  • how microeconomic policies shifts aggregate supply and improves productivity
  • its direct and indirect effects on individual product and factor markets, individual industries and the economy
  • the significance of regulation and deregulation – competition policy
​

What is it?

Microeconomic reform is the generic term for 'government policies designed to deregulate or re-regulate product, service and factor markets in such a way as to promote competition and efficiency in relation to both domestic and international markets' (Robertson, Quayle and McEachern, 1994: 384).

Economic policies that tend to be encompassed by the microeconomic reform heading include:

  •  deregulation of the labour market,
  •  reducing tariffs and other forms of protection for domestic industry against foreign competition,
  •  deregulation of the financial markets,
  •  privatisation and corporatisation of public enterprises, and
  •  reducing distortionary taxes.
"Microeconomic Reform and Productivity Growth" https://www.aph.gov.au/

How does it work?

When the going gets tough, such as our experience with the Coronacession, macro policy is the go-to government policy. Quite rightly as macroeconomic policies aim to boost aggregate demand and get the economy back on track for economic prosperity. Microeconomic reforms have a place though, they're just not the instantaneous motivator for economic growth that big spending budgets or easing monetary policies are. Supply-side or microeconomic policies are fundamental and are an important enabler of the economy.

Microeconomic reforms build agile economies that can withstand shocks, and in the case of the COVID pandemic, Chair Michael Brennan from the Australian Business Economists points out three main reasons we should focus on microeconomic policy:
  • First, because the COVID pandemic is, among other things, a reallocation shock
  • Second, we face a particular challenge around new business formation and risk appetite, and
  • Third, because a strong microeconomic lens can help us build resilience and protect against bad policy.
Read more from Michael Brennan's in the link "The COVID-19 Recovery". 

The COVID-19 Recovery
Then click on the image of the setting of a Corona sun, to head to the jamboard. Answer the questions on the jamboard using the information from the article. Finish up by writing a summary in your workbook.
JAMBOARD
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Where is it happening?

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Economics is all about the now. Check out these articles to find out where microeconomic policy is happening, how it is affecting individuals and markets, and who are the winners and the losers.

Choose ONE article and in the same column, answer these three basic questions:
  1. How is the microeconomic reform discussed in the article related to aggregate supply?
  2. How has the microeconomic reform led to changing efficiencies (positive or negative or a combination)?
  3.  How has this microeconomic policy affected a common metric used in economics, for example: inflation, unemployment, external stability, stability of the currency.
​

Made with Padlet

Think about it

Has working from home actually improved productivity? If it has could it be the next big thing in microeconomic reforms?
Has coronavirus and working from home given us the biggest productivity increase of the century?


​What significant microeconomic policy changes could come out of COVID-19?
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  • Home
  • Assessment
    • Y11
    • Y12
  • FOR TEACHERS
  • Preliminary
    • THE ECONOMICS OF EVERYTHING >
      • WEEK 1
      • WEEK 2
      • WEEK 3
      • WEEK 4
      • WEEK 5
      • WEEK 6
      • WEEK 7
      • WEEK 8
      • WEEK 9
      • WEEK 10
      • WEEK 11
    • CURIOUS CHOICES >
      • WEEK 1
      • WEEK 2
      • WEEK 3
      • WEEK 4
      • WEEK 5
      • WEEK 6
      • WEEK 7
      • WEEK 8
      • WEEK 9
      • WEEK 10
    • THE WORLD IS NOT FLAT >
      • WEEK 1
      • WEEK 2
      • WEEK 3
      • WEEK 4
      • WEEK 5
      • WEEK 6
    • TO INFINITY AND BEYOND >
      • LABOUR MARKET INSTITUTIONS
  • HSC
    • THE GLOBAL ECONOMY >
      • INTEGRATION
      • TRADE
      • ECO DEVELOPMENT
    • AUSTRALIA'S PLACE IN THE GLOBAL ECONOMY >
      • AUS TRADE & FIN FLOWS
      • EXCHANGE RATES
      • PROTECTION IN AUS
    • ECONOMIC ISSUES >
      • ECONOMIC GROWTH
      • UNEMPLOYMENT
      • INFLATION
      • EXTERNAL STABILITY
      • INCOME & WEALTH
      • ENVIRONMENT
    • ECO POL & MMENT >
      • OBJECTIVES
      • FISCAL POLICY
      • MONETARY POLICY
      • MICRO POLICIES
      • LABOUR MKT POLICIES
      • ENVIRONMENTAL POLICY
      • LIMITATIONS
  • Contact