Today, I was given a chance to manage the Australian economy. Well, not really but it is for real. Haha. OK, let me explain, in my economics tutorial today we have to play this simulation of the Australian economy. To start with, we (My partner, Martha and I) are given data on the 1987 Australian economy. And in this simulation, we only have the power to manage four variables namely, government spending, income tax, sales tax and money supply. We were given 10 years to manage the economy. It turns out that managing an economy is a LOT harder in practical because my knowledge in theory is not helpful at all. OK, in macroeconomics, we always have to aim for a couple of goals which are low unemployment and inflation, favourable balance of payment, positive economic growth and favourable exchange rates. But, in this simulation we have to aim for low unemployment, inflation and interest rate. In 1987, the unemployment level was 6.3%, rate of inflation was 8.0% and interest rate was at 8.5%....
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