Hi5003 Economics For Business-Economic Growth Assessment Answers
criteria:
- The current research on the topic
- Analysis of the topic and the application
- Student’s showing their understanding and current debate by different governments, economists and the industry
- Economic Growth of Australia in last 3 to 5 years
- Unemployment in Australia last 5 years
- Fiscal Policy of Australian government in last 3 to 5 years
- Australian current debate/Policy on renewable energy
- Carbon Tax/ETS debate in Australia
- Reforms in Meat, Agriculture, Education and Tourism Industry in Australia (Choose Only One ndustry out of thi list).
Answer:
In the area of economics, economic growth of nations is essential for their continued survival in today’s more challenging scenario. Economic growth contributes in the overall growth of nations. Along with this, it signifies towards the economic health of nations. In other words, it can be said that, by considering economic growth of a nation, economists and investors can measure that the economy of nation is favorable or not. Moreover, economic growth refers as a raise in the production output that the economy of a particular nation produces over a period of time. Economic growth plays a major role to portray an increase in the production that an economy may produce by using all its scarce resources in an effectual manner. It is a long-term increase of the production output of the economy. Economic growth of a nation is calculated by measuring the changes in its GDP (Gross Domestic Product).
On the other hand, economic growth makes an effective comparison between the current and previous economic outputs of nations. It measures that how much more the economy produces in current year as compare to previous years. An increase in the production of current year indicates towards the positive economic growth of a nation. A decrease in the production is a sign of the negative economic growth of a nation. In general, economic growth points to prosperity of nations. In addition, this research essay would be useful to exemplify the economic growth of Australia. Economic factors that contribute economic growth of a nation would also be considered to determine the actual economic growth of Australia. Moreover, this essay would be useful to show an effective analysis of the economic growth of nation in last 3-5 years. On the whole, this research essay would increase the knowledge of learners about the economic growth of Australia in recent years.
Economic Growth of Australia
Australia is a developed country. The ‘developed’ word stands for the positive economic growth of the nation. In other words, it can be assumed that, the economic growth of nation is advanced than other nations. Along with this, as of 2015, with a GDP (Gross Domestic Product) of AUD $1.62 trillion, the economy of nation is considered as one of the biggest diverse market economies in all over the world. The economic growth of Australia indicates towards high productivity of nation in a specific time period (Sloman, Norris & Garrett, 2013). Moreover, economic factors including GDP, inflation rate, mortality rate, employment rate, interest rate, and so on highly contribute in the economic growth of the nation. Also, fiscal policy, monetary policy, and government spending play a significant role in the positive economic growth of the nation. If these economic factors work in the favor of a nation then there can be seen a high economic growth of nation and vice versa. The economic growth of Australia is higher than other countries; and the below graph portrays the positive economic growth of nation in previous years.
The above graph shows GDP growth of different nations during 2008-2012. The increased GDP growth points towards the positive economic growth of nations. In this graph, it is clearly visible that, the GDP growth of Australia is higher than other nations like South Africa, Canada, United States, New Zealand, etc. Along with this, the global financial crisis of 2007-08 has influenced the economies of nations in a negative manner. But, the economy of Australia was not influenced too much during this financial crisis (Battellino, 2010). The above graph illustrates the economy growth of nations just after financial crisis. The economy growth of Australia can be seen superior to other nations. Moreover, there can be seen a regular increase in the economy growth of nation in last three to five years.
On the other hand, the GDP growth of Australia highly contributes in its economy growth. In the area of economics, GDP can be considered a major gauge to estimate the economy health of a nation in an effectual and an accurate manner. Moreover, the economic growth of Australia mainly depends on its mining and agricultural sector. It is because of these both sectors contribute around 12 % in the GDP of nation. In other words, it can be believed that, Australia has the largest economies in the world. The GDP rate of nation plays a major role to decide the economic performance and position of nation in a specified time period (Thorpe & Leitão, 2014). The below graph is useful to show that how the economy of Australia is growing faster than the advanced economies of other nations.
In addition to this, the major fact related to the economic growth of Australia is that its GDP has approximately 2.16% of the world economy. The global financial crisis of 2007- 2008 was hazardous for the economic growth of nations. The crisis negatively influenced the economic growth and GDP growth of nations (McLean. 2013). Moreover, it can be believed that, during the financial crisis, the GDP growth of countries mainly declined; and the decreased GDP influenced the economic growth of nations in a more negative manner.
But, Australia is the one that holds the improved economic at that time period. There can be seen a continuous increase in the GDP and economic growth of nation after the financial crisis 2007-08. The GDP growth of Australia noted down higher than other nations. Moreover, by considering the report of the ABC (Australian Bureau Statistics), the GDP of Australia was 2.5% in 2014, 2.3% in 2015, and 2.8% in 2016. The report shows a regular increase in the GDP of nation. A continuous increase in GDP indicates towards the positive economic growth of a nation. Overall, it can be believed that, the annual GDP growth rate of Australian enhanced rapidly in recent years; and it was more than the GDPs of other nations in the world (Plumb, Kent & Bishop, 2013).
Along with this, GDP of a nation computes the financial and market values of all its final commodities as well as services that are produced in a specific time period. The increased production level contributes in the GDP growth of a nation. The proportion change in real GDP represents economic growth of a nation. It can be considered good when it is positive; and bad when it is negative. The economic growth can be seen positive in the context of Australia. The below graph is useful to depict a continuous increase in the annual GDP growth rate of Australia in past three to five years.
On the other hand, the employment rate of nation highly contributes in the economic growth and development of Australia. It is well-known that people of nation play a significant role in the economic growth of a nation. In other words, it can be said that, economic growth & development is created by people of nations. Employment rate is useful to determine that the labor forces of nation are completely being used in the economic growth of nations. Moreover, an increase in the employment rate shows a decrease in the unemployment rate of nation. It means the people of a nation are employed. An increased employment rate indicates towards the increased productivity of a nation. The increased productivity is a sign of positive economic growth of a nation. Australia is a well developed country. It offers job opportunities to its people (Helpman, Itskhoki & Redding, 2010). Thus, an increase can be seen in the employment rate of Australia in recent years. The below graph demonstrates the employment rate of Australia in last three to five years.
On the premises of the above graph, it can be believed that, the employment rate of nation has been increased in recent years. The increased employment rate shows a raise in the standard of living of people. It means people purchase commodities or services to improve their living standards in a proper manner. The increased level of consumption plays a major role to enhance the productivity of nation. The increased productivity automatically contributes in the GDP as well as economic growth of nation (Carvalho, 2015). Moreover, the unemployment rate of Australia can be examined lower in previous years. The lower unemployment rate of Australia played a key role in the growth of productivity, GDP, and economic growth of nation. As a consequence, it can be assumed that, the increased employment rate of Australia has played a significant role in the positive economic growth of nation in past years. The below graph is useful to show that how the unemployment rate of Australia has decreased in past 5 years.
In addition to this, the fiscal and monetary policies of nations highly contribute in the economic growth of nations. Fiscal policy specifies the government spending as well as taxation of a nation that widely influences the economy of nation either in a positive or in a negative manner. Along with this, with the help of the fiscal policy, the government may reduce taxes to boost the productivity of a nation in an effectual manner. It reduces the production costs for the business organizations (Endegnanew, Turner-Jones & Yartey, 2012).
Moreover, a monetary policy plays a significant role to lessen the interest rates to enhance the demands of commodities of a nation. Both these policies contributed in the economic growth of Australia in last 3 to 5 years. These policies improved the economic performance of Australia in all over the world. The nation has gone through in the 26th year of continuous economic growth just because of its fiscal and monetary policies. These both policies worked in the favor of nation during the period of the global financial crisis 2007-2008. Also, both fiscal and monetary policies highly contributed in the reduction of the fluctuations that subsist in the Australian economy.
Along with this, the monetary and fiscal policies of Australia played a major role to raise the GDP of nation. It is because of these polices reduced the interest rates and taxes; and these reduced taxes improved the demand of the Australian products and services in the world. Moreover, due to increased demand, there can be seen an increase in the production level of nation.
The increased production generated the job opportunities within nation. An increase in production directly influences the GDP and economy of nation in a positive manner (Abbas, Bouhga-Hagbe, Fatás, Mauro & Velloso, 2011). Moreover, as per the report of ABC, the GDP rate of nation has increased around 3.3% in recent years; and it can be considered a high increase in the annual GDP of Australia. The monetary and fiscal policies of nation played a major role to control the inflation rate of Australia in past years. So, it can be believed that, the monetary and fiscal policies of nation contributed in the sustainable economic growth of nation. Both these policies played numerous important roles in the positive economic growth of Australia in last three to five years.
In the same manner, the interest rate of Australia contributed in its economic growth in recent years. Interest rate is the most important economic factor that is directly linked to the economic growth of nations. A lower interest rate plays a major role in the economic growth of nation. The main reason behind it is that if a nation reduces its interest rates then business firms borrow huge amount of money to raise their production outputs. An increase in the outputs has a positive impact on the GDP as well as economic growth of nations (Di Giovanni & Shambaugh, 2008). Apart from this, the higher interest rate influences the economy growth of nations in a negative manner.
The main reason behind it is that just because of these high interest rates, business firms charge high money for the final goods and services. In this situation, the buyers have to pay a huge amount of money to purchase those commodities or services. The high prices of commodities reduce the consumption level of nation; and the reduced consumption level lessens the productivity of business organizations. The decreased production is a sign of negative economic growth of nations.
Along with this, the Australian interest rates work in the favor of nation. The interest rates of nations are lower than other nations. There can be measured an incessant decline in the interest rates of nation in the previous years. The below graph shows that how the Reserve Bank of Australia (RBA) has reduced interest rates in last 5 years.
In this graph, it is visible that, the interest rate of Australian has been decreased continuously in past years. In 2016, there can be seen a huge decline in the interest rate of Australia. The decreased interest rates enhance the consumption level, productivity, and GDP of nation in an automatic manner. The increased GDP is directly related to the economic growth of a nation. As a consequence, it can be believed that, the economy of Australia has been improved in previous years.
In addition to this, inflation rate of Australia played a major role in the positive economic growth of nation. Inflation indicates towards the increased price levels in an economy. Inflation rate of a nations influence their economic growth either in a positive or in a negative manner (Greasley & Madsen, 2016). Along with this, the higher inflation rate is a sign of negative economy growth of a nation. It is because of high inflation rates of nations increase the prices of their commodities. The increased prices of commodities reduce the consumption level of nations. People do not show their interests to purchase these high costs commodities or services. The decreased consumption level influenced the productivity of nations in a negative manner. A decrease in the production points towards the negative economy growth of a nation. But, lower inflation rates of nations play a significant role in the positive economy growth of nations. The main reason behind it is that lower inflation rates reduce the prices of commodities; and consequently improve the consumption level of nations. The increased consumption level improves the purchasing power, productivity, GDP, and economy of countries (Endegnanew, Turner-Jones & Yartey, 2012).
Apart from this, the inflation rate of Australia worked in the favor of nation. The inflation rate of Australia is lower than other nations of the world. There can be seen a decline in the inflation rate of nation in previous years. The decreased inflation rate has improved the productivity and economy of nation (Foster, 2016). The below given graph is useful to portray a clear picture of inflation rate of Australia in recent years.
In the above graph, a regular decrease in the inflation rate of Australia is visible in a clear and a proper manner. As of 2016, the inflation rate of nation is lower than previous years. In other words, it can be believed that, in 2016, the inflation rate of Australia was lower than the previous nineteen years. According to the report of ABC, this is considered as the lowest inflation rate in the history of Australia (Novak, 2013). As a consequence, it can be believed that, the lowest inflation rate of Australia highly contributed in the economic growth of nation in recent years.
On the other hand, government spending plays a significant role in the positive economic growth of nations. Government spending played an important role in the economic growth of Australia. The government of nation spent a large proportion of its GDP in the welfare of nation in past 3 to 5 years. The government spent large proportion on the education section of nation. Education highly contributes in the positive economic growth of nations (Phillips, 2015). With the help of high education, people become able to capture job opportunities to raise their standards of living in an effectual manner. Moreover, as per the report of ABC, the Australian government spent huge amount of money on the welfare of people including health & education. The government spent on the infrastructure and transportation to reduce trade barriers and to enhance trade among nations. The below chart demonstrates the total spending of the Australian government in previous years:
In the above chart, it is clearly visible that, the Australian government spent huge money on the welfare of the society and business firms. The main objective behind this spending is the economic growth of nation. On the whole, it can be believed that, all the economic factors worked in the favor of Australian in last three to five years. The economists also believe higher economic growth of nation in future time period.
Conclusion
On the basis of the above investigation, the positive economic growth of Australia can be clearly seen in last 3 to 5 years. The economic variables of nation played numerous important roles in the economic growth of nation. Along with this, GDP rate extremely contributed in the economic growth of Australia. The Australian government and the Reserve Bank of Australia are doing good to enhance the economic growth of nation. They developed effective monetary and fiscal to recue interest rates as well as taxes to raise the production outputs of nation in recent years.
Moreover, it is observed that, in previous years, the Australian government increased its spending for the social welfare and economic growth of the nation. The decreased interest rate and inflation rate contributed to raise the production as well as consumption level of the nation. The increased production reduced the inflation rate and created job opportunities in the economy of the nation. The increased production contributed in the GDP; and therefore in the economic growth of Australia. On the whole, there can be seen a continuous economic growth of Australia in previous years. As a consequence, high economic growth of Australia is predicated by the economists in the forthcoming years.
References
Abbas, S. A., Bouhga-Hagbe, J., Fatás, A., Mauro, P., & Velloso, R. C. (2011). Fiscal policy and the current account. IMF Economic Review, 59(4), 603-629.
Australian Government. (2013). Retrieved From: https://www.ncoa.gov.au/report/appendix-vol-2/10-17-grants-programmes.html
Battellino, R. (2010). Twenty years of economic growth. Structural Change in the Australian Economy 1 Durable Goods and the Business Cycle 11 Economic Change in India 19 Ownership of Australian Equities and Corporate Bonds 25 Interpreting Market Responses to Economic Data 35, 103.
Budget (2016-2017). Budget overview. Retrieved From: https://budget.gov.au/2016-17/content/glossies/overview/html/overview-01.htm
Carvalho, P. (2015). Youth unemployment in Australia. Policy: A Journal of Public Policy and Ideas, 31(4), 36.
Di Giovanni, J., & Shambaugh, J.C. (2008). The impact of foreign interest rates on the economy: The role of the exchange rate regime. Journal of International Economics, 74(2), 341-361.
Endegnanew, Y., Turner-Jones, T., & Yartey, C. A. (2012). Fiscal Policy and the Current Account: Are Microstates Different? USA: International Monetary Fund.
Foster, J. (2016). The Australian growth miracle: an evolutionary macroeconomic explanation. Cambridge Journal of Economics, 40(3), 871-894.
Greasley, D., & Madsen, J. B. (2016). The rise and fall of exceptional Australian Incomes since 1800. Australian Economic History Review.
Helpman, E., Itskhoki, O., & Redding, S. (2010). Inequality and unemployment in a global economy. Econometrica, 78(4), 1239-1283.
Jericho, G. (2012). Who can claim the economic gold medal? Retrieved From: https://www.abc.net.au/news/2012-08-22/jericho-golden-eras/4212882
McLean. L.W. (2013). Why Australia Prospered: The Shifting Sources of Economic Growth? Australia: Princeton University Press.
Novak, J. (2013). Economic consequences of the size of government in Australia (Doctoral dissertation, RMIT University).
Phillips, B. (2015). Living standard trends in Australia: Report for Anglicare Australia. Anglicare Australia.
Plumb, M., Kent, C., & Bishop, J. (2013). Implications for the Australian economy of strong growth in Asia. Australia: Reserve Bank of Australia.
Sloman, J., Norris, K., & Garrett, D. (2013). Principles of Economics. Australia: Pearson Higher Education AU.
Thorpe, M., & Leitão, N. C. (2014). Economic growth in Australia: Globalisation, trade and foreign direct investment. Global Business and Economics Review, 16(1), 75-86.
TRADING ECONOMICS. (2017). Australia Employment Rate. Retrieved From: https://tradingeconomics.com/australia/employment-rate
TRADING ECONOMICS. (2017). Australia GDP Growth Rate. Retrieved From: https://tradingeconomics.com/australia/gdp-growth
TRADING ECONOMICS. (2017). Australia Inflation Rate. Retrieved From: https://tradingeconomics.com/australia/inflation-cpi
TRADING ECONOMICS. (2017). Australia Interest Rate. Retrieved From: https://tradingeconomics.com/australia/interest-rate
TRADING ECONOMICS. (2017). Australia Unemployment Rate. Retrieved From: https://tradingeconomics.com/australia/unemployment-rate.
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