FC0t0HY

An economy consists oI the economic system oI a country such as the labor, capital and land
resources; and the manuIacturing, trade, distribution, and consumption oI goods and services
oI that area. An economy may also be described as a spatially limited and social network
where goods and services are exchanged according to demand and supply between
participants by barter or a medium oI exchange with a credit or debit value accepted within
the network.
Any economy oI a country can be broadly classiIied into communist, socialist and mixed
economy.
HlXF0 FC0t0HY
Mixed economy implies demarcation and harmonisation oI the public and private sectors.
In it, Iree Iunctioning oI the market mechanism is not permitted and the government
intervenes or regulates the private sector in such a way that the two sectors become mutually
re-in Iorcing. A mixed economy represents an achievable balance between individual
initiative and social goals. Planning and market mechanisms are so adjusted that each is used
Ior realising the objectives oI the economy to which it is most suited. There is a commitment
on the part oI both the sectors to national objectives and priorities.
In a typical mixed economy, the government may run such things as the postal service, rail
lines, libraries, and in some cases, the health care service. Even in industries which are not
owned or run by the government, its inIluence is very noticeable in the Iorm oI taxes and
regulations like wage controls.
The economy oI the AUSTRALIA is one oI the more prominent examples oI a mixed
economy in the world. This is so because both private enterprise and government regulation
have come to be integral and important to the economy as it now stands. . For example, the
principle oI free enterprise is alive and well in the AUSTRALIA. Businesses reserve the
right to incorporate, and to employ and deny employment to whoever they wish, provided
they do not engage in discrimination or other illegal employment practices. The means oI
production are still mostly privately owned, and private citizens can buy, sell, and invest any
way they choose.
owever, overnment re:ation has a strong presence as it does in many economies,
because oI the prevailing idea that some services are better provided Ior by the government
than private enterprise. For example, most people all over the world have no problem with
government control oI things such as highway construction and repair, vital records like birth
certiIicates, and oI course, national deIense. Despite the strong emphasis on individual
Ireedom that is part oI many countries' governing philosophies, it is generally accepted that
these services and others like them are perIormed best at a government level.
0lSA0vAtTA6FS 0F HlXF0 FC0t0HY
Since welIare oI society is important in a mixed economy it leads to ower than
optim:m :se oI the resources because government mobilize the resources towards
the production oI those goods and services which are beneIicial Ior the society as a
whole rather than producing those goods and services which in economic terms are
more beneIicial Ior an economy.
Under mixed economy private enterprises have to Iace lot oI diIIiculty because oI
various government loopholes like favoritism and b:rea:cratic nature which is
prevalent in mixed economy.

SuSTAltAlF 6R0wTH
Sustainable development is development that meets the needs oI the present without
compromising the ability oI Iuture generations to meet their own needs.
The problem oI development is more social than economic. It is not to maximize economic
growth by meeting demand in the most eIIicient way. It is to generate development that
enables all people to make a decent living, in ways that guarantee that Iuture generations can
do the same. II we can convert the needs oI humanity into demand, we can create economic
growth that is both socially equitable and environmentally sustainable.
AUSTRALIA is a country which looks Ior sustainable growth over years. It is a prosperous
economy with a GDP that is a itte hiher than countries like the UK, Germany and France
when it comes to purchasing power. Moreover, the country was also given the third position
in 2005 UN uman Development Index survey. It is indeed admirable that in spite oI the
global economic slump, Australia has put up a resilient Iront and has been able to ward oII
the eIIects oI the global slump due to the rising output in the domestic economy. owever,
many are concerned about the high current account deficit and net forein debt owed by
the private sector oI Australia. The Australian economy has not been thro:h a recession
since the 1990's.
H0tFTARY P0llCY
Monetary policy is the process by which the monetary authority oI a country contros
the s:ppy of money, oIten targeting a rate oI interest Ior the purpose oI
promoting economic growth and stability. The oIIicial goals usually include relatively stable
prices and low unemployment.
The actions oI a central bank, currency board or other regulatory committee that determine
the size and rate oI growth oI the money supply, which in turn aIIects interest rates. Monetary
policy is maintained through actions such as increasing the interest rate, or changing the
amount oI money banks need to keep in the vault.
IN AUSTRALIA
The Reserve Bank oI Australia is responsible Ior Iormulating and implementing monetary
policy. Objectives oI monetary policy
the stability oI the currency oI Australia;
the maintenance oI Iull employment in Australia; and
The economic prosperity and welIare oI the people oI Australia.
The Board usually meets eleven times each year, Ior each meeting, the Bank`s staII
prepare a detailed account oI developments in the Australian and international
economies, and in domestic and international Iinancial markets. The papers contain a
recommendation Ior the policy decision.
The Reserve Bank Board makes decisions about interest rates independently oI the political
process that is, it does not accept instruction Irom the Government oI the day on interest
rates. This principle oI central bank independence in the operation oI monetary policy, in
pursuit oI accepted goals, is the international norm. It prevents manipulation oI interest rates
Ior political ends, and keeps monetary policy Iocused on its long-term goals.
In Australia, most deposits and oans are at variable or short-term fixed rates, so there is a
high pass through oI changes in the cash rate to deposit and lending rates. But because oI the
other Iactors inIluencing capital market rates, and Iluctuations in the level oI competition in
the banking sector, deposit and lending rates do not aways move in ockstep with the cash
rate.
In 2010, Australia increased its benchmark interest rate 25 basis points to 4.25, making it
the 5th increase this tightening cycle.
Australia continues to ead the charge on monetary poicy tihtenin as the strength oI the
Australian economy, and near-trend inIlationary conditions, make it diIIicult to argue Ior
historically loose monetary policy rates.
FlSCAl P0llCY
Fiscal policy is the means by which a government adjusts its eves of spendin in order to
monitor and inIluence a nation's economy. It is the sister stratey to monetary poicy with
which a central bank inIluences a nation's money supply. These two policies are used in
various combinations in an eIIort to direct a country's economic goals.
Fiscal policy basically states that government can inIluence macroeconomic productivity
levels by increasing or decreasing tax levels and public spending. This inIluence, in turn,
curbs inIlation, increases employment and maintains a healthy value oI money.
AUSTRALIAN Government took decisive action to counter the economic imbalance caused
by the 2008--2009 global financia crisis that crippled the economies oI its trading partners
Japan, the United States and others.
In October 2008, Prime Minister Kevin Rudd announced a comprehensive $42 biion Nation
Building Economic Stimulus Plan to support Australian Jobs and businesses that invested in
the nations vita infrastr:ct:re. It also rolled out tax breaks Ior small businesses on capital
expenditure items. II a small business purchased eligible assets costing $1,000 or more
between December 13,2008 and June 30, 2009, it could claim an additional 30 percent tax
deduction. Recent reports indicate that the government`s two year $42 biion
Nation Building Plan has stimulated the Australian economy and S:pported oca jobs
making Australia not only the best performin advanced economy in 2009, but also the
ony advanced economy to record positive rowth over the period. A major highlight oI
the government`s Iiscal policy initiative was to deliver the Nation Building Plan in
cooperation with state and territory governments and local councils. The number oI
commitments Ior Iinance Ior residential occupation has increased by 32 percent since
September 2008, while the number oI commitments Ior Iinance Ior the purchase or
construction oI new properties has increased by 59 percent over the same period.


Continuing improvement in A:straia`s local macroeconomic environment has resulted in
the country`s risk trend being upgraded the nation has also been rated one oI the safest
co:ntries to invest obay. Combining Iiscal and monetary policies inIluence an
economy`s perIormance. Australia has so Iar improved the probability oI maintaining a
reasonable balance between the demand side and the supply side oI the economy, thereby
avoiding the extremes oI recession.

F0RFl6t P0llCY
A country's Ioreign policy, also called the Ioreign relations policy, consists oI selI-
interest strateies chosen by the state to safe:ard its nationa interests and to achieve its
goals within international relations milieu. The approaches are strategically employed to
interact with other countries. In recent times, due to the deepening level oI globalization and
transnational activities, the states will also have to interact with non-state actors. The
aIorementioned interaction is evaluated and monitored in attempts to maximize beneIits oI
multilateral international cooperation. Since the national interests are paramount, Ioreign
policies are designed by the government through high-level decision making processes.
FOREIGN POLICY OF AUSTRALIA
Its Iirst major independent forein poicy action was to conclude an agreement in
1944 with New Zeaand dealing with the security, welIare, and advancement oI the people
oI the independent territories oI the PaciIic (the ANZAC pact). AIter the war, Australia
played a role in the Far Eastern Commission in Japan and supported Indonesian
independence during that country's revolt against the Dutch (194549).
INTERNATIONAL AGENCIES, TREATIES, AND AGREEMENTS
Being one oI the drafters of the UN Charter, Australia has given Iirm support to
the United Nations and its specialised agencies. It was a member of the Sec:rity Co:nci in
198687, a member oI the Economic and Social Council in 198689, and a member oI the
UN H:man Rihts Commission in 199496. Australia takes a prominent part in many other
UN activities, including peacekeeping, disarmament negotiations, and narcotics control.

Australia also is active in meetings oI the Commonwealth eads oI Government and the
South PaciIic Forum, and has been a eader in the Cairns Gro:p countries pressing Ior
agricultural trade reIorm in the Uruguay Round oI the General Agreement on TariIIs and
Trade (GATT) negotiations and in the APEC Iorum. In September 1999, acting under a
UN Security Council mandate, Australia led an international coalition to restore order in East
Timor upon Indonesia's withdrawal Irom that territory.
Australia has devoted particular attention to relations between developed and developing
nations, with emphasis on the countries oI the Association oI Southeast Asian Nations
(ASEAN) Indonesia, Singapore, Malaysia, Thailand, the Philippines, and Brunei and
the island states oI the South PaciIic. Australia is an active participant in the ASEAN
Reiona For:m (ARF), which promotes regional cooperation on security issues. Australia
was a participant at the ina::ra ASEAN sponsored East Asia S:mmit in 2005.
Australia's place at the summit was only secured aIter it agreed to reverse its policy and
accede to ASEAN's Treaty oI Amity and Cooperation in Southeast Asia. Australia had been
reluctant to sign the treaty out oI concerns regarding how it would eIIect Australia's
obligation under other treaty arrangements including ANZUS.
Australia has a large biatera aid proramme (about $1.3 billion Ior 199798, mostly in the
Iorm oI grants) under which some 60 countries receive assistance. Pap:a New G:inea
(PNG), a Iormer Australian trust territory, is the arest recipient of A:straian assistance.
Starting in 199799 Australia contributed to the IMF program Ior Thailand and assisted
Indonesia and PNG with regional environmental crisis and drought relieI eIIorts.
SECURITY TREATIES
Australia is party to the Australia, New Zealand, United States security treaty.
It has also been a party oI the Australia, New Zealand, United Kingdom Iorce.
TRADE
Overall Australia's largest tradin partners are the United States, Japan, China, and
the United Kingdom. Australia currently has biatera Free Trade Areements with New
Zealand, the United States, Thailand and Singapore as oI 2007. As well as this, Australia is in
the process undertaking studies on Free Trade Agreements with ASEAN, China, Chile, India,
Indonesia, Japan, South Korea and Malaysia.
Australia-Chile Free Trade Agreement
Australia New Zealand Closer Economic Relations Trade Agreement
Australia-United States Free Trade Agreement
RELATIONSHIP WITH INDIA
BeIore independence A:straia and India were both part oI the British Empire and
both are part oI the Commonwealth oI Nations. They also share political, economic, security,
linguistic and sporting ties.
Abo:t the A:straia-India Co:nci
The Australia-India Council (AIC) was established on 21 May 1992, in response to a
recommendation by the Senate Standin Committee on Foreign AIIairs, DeIence and
Trade, Iollowing an inquiry into Australia's relations with India.
The Council's purpose is to broaden the reationship between Australia and India by
encouraging and supporting contacts and increasing levels oI knowledge and understanding
between the peoples and institutions oI the two countries. The Council initiates or supports a
range oI activities desined to promote a reater awareness oI Australia in India and a
greater awareness oI India in Australia, including visits and exchanges between the two
countries, development oI institutional links, and support oI studies in each country oI the
other. The Council oIIers support, in the Iorm oI Iunding, Ior projects likely to contribute to
the development oI the relationship, within the context oI AIC objectives and guidelines.
By initiating and supporting a range oI activities that have put it on the map, the Co:nci has
played a reconised and respected role in promoting the relationship between Australia and
India. It has inIormed and educated Australians about India, and it has inIormed persons
interested in the bilateral relationship about the way it is developing. It has Iurthered the
Government's forein poicy and trade objectives and added value to Australia-India
relations, to initiate and support exchanges that demonstrate to Indians Australian excellence
in the arts, sports and other Iields, and that give Indians an opportunity to learn more about
the nature oI Australian society.
C0tCluSl0t .
Monetary policy contributes best to macroeconomic stability by anchoring inIlation
expectations at a level consistent with price stability. A Iorward-looking, medium-term
oriented monetary policy provides the best Iramework to this purpose. Fiscal policies too
should have a medium to long-term orientation and largely rely on automatic stabilisers in the
short-term. Monetary , Fiscal and Foreign policies used in eIIective combination will lead to
sustainable development oI a country`s economy.