The paper "Analysis of the Australian Economy" is a perfect example of a micro and macroeconomic case study. Fundamental economic provisions elaborate on the performance or health of a country’ s economy. There are a number of economic parameters used to measure economic health status, the key one is the Gross Domestic Product, GDP others include the rate of inflation, reserve bank monetary policies and unemployment rates and financial aggregates among others. This report focuses on the Australian economy with a special focus on key parameters, the GDP, inflation and unemployment rates in order to give a research-based view of the Australian economy. a.
Real GDP Growth percentage measures and why it is an important economic indicator The real GDP Growth rate is mainly driven by four major components namely: personal consumption such as the volume of retail sales, business investments such as construction, government spending and imports and exports. Notably, exports drive growth while imports have a negative impact. In essence, the real GDP growth rate which is normally expressed in percentage shows a country’ s economic health. The rate is positive if the economy is growing and negative when the economy is heading towards a recession.
Notably, real GDP takes into account the effects of inflation and other seasonal effects. In this sense, the real GDP takes into account the nominal value adjusted to consider price changes in order to give a clear picture of whether the value of output has increased or prices have increased. In order to determine this, a statistical tool referred to as price deflator is used to adjust GDP from nominal to constant prices. The growth rate is normally reported quarterly but it is annualized in order for it to be compared with the previous year.
Real GDP is calculated as follows; Real GDP Growth= (2009's Real GDP - 2008's Real GDP)/(2008's Real GDP) (Pearson 2009, p. 23). The GDP is an imperative economic indicator because it shows the economic health of a country. More so, it also gives more information about the size of the economy and its current performance. The GDP is always positive when the economy is expanding but negative when the economy is slowing down.
If the GDP is growing, it means that the businesses, jobs and personal income are also growing.
Australia GDP Growth Rate 2013, Trading economics, accessed from http://www.tradingeconomics.com/australia/gdp-growth
Australia GDP 2012, Trading Economics, accessed from http://www.tradingeconomics.com/australia/gdp
Australia Unemployment Rate 2013, Trading Economics, accessed from http://www.tradingeconomics.com/australia/unemployment-rate
Hossain, AA 2009, Central Banking and Monetary Policy in the Asia-Pacific, Edward Elgar Publishing, Sydney. Pp.20-32.
Pearson, G 2009, Financial Services Law and Compliance in Australia, Cambridge University Press, Melbourne. Pp. 19-31.
Reserve Bank of Australia 2012, Financial aggregates, accessed from http://www.rba.gov.au/statistics/frequency/fin-agg/2012/fin-agg-0112.html
Reserve Bank of Australia 2013, Measures of Consumer Price Inflation, accessed from http://www.rba.gov.au/inflation/measures-cpi.html
Reserve Bank of Australia 2013, About Monetary Policy, accessed from http://www.rba.gov.au/monetary-policy/about.html
Reserve Bank of Australia 2013, Index of Commodity Prices, accessed from http://www.rba.gov.au/statistics/frequency/commodity-prices/2013/icp-0713.html