1. Introduction

In this essay, the three objectives are to be discussed in a small opened Australian macro-economy. Firstly, I am going to brief of the Australian economic situation in 1930’s depression. Then secondly, the policies and theories, which could affect to Australia’s small and open economy, are discussed as a view of macroeconomic approach. Lastly, I would like to talk about the difficulties for Australian government to conduct policy.

2. Great Depression

In Australia, the 1920’s were a period of rapid growth in all sectors of the economy. There was a high rate of capital inflow, mainly from Britain, and the prices of Australia’s major exports, wool and wheat, were high. Great confidence led to overproduction and over investment. At that time, recorded unemployment rate fell below eight percent. However, a slow fall began in wool, wheat and mineral export prices. Britain stopped lending money and export prices fell by nearly half. These caused the depression in Australia as well as the world in late 1920’s.

1. Introduction
2. Great Depression
3. Economic cycles
4. Government Policies of Demand
5. Small and Open Economies
6. Leakages and Multiplier
7. Conclusion: Why Australian Governments has difficulties in performing policies.
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