The paper "Macroeconomic Policy-Inflation, Unemployment and Growth in Australia" is a perfect example of a micro and macroeconomic case study. The Global Financial Crisis affected the economic growth of all developed and developing countries. In fact, it almost led to the collapse of the economy of some influential developed countries. Australia was not left out. As the analysis in this paper will show, Australia had to change its macroeconomic policy from that which focused on controlling inflation to that which focused on trying to avoid recession. As the analysis will also show, these two macroeconomic policy approaches seem to contrast in terms of objectives, instruments and targets.
Therefore, through outlining the experience of the Australian economy over the last 10-15 years while putting into consideration the major microeconomic aggregates, this paper aims at discussing the contrast between these two policy approaches and their impacts on the Australian economy. In addition, it discusses and assesses how instruments and targets of the macroeconomic policy can be applied in the current Australian policy framework. The paper will then lastly look at the application of economic theories in understanding economic policy in Australia. Experiences of the Australian economy Source: Taylor, Bradley, Dobbs, Thompson & Clifton (2012) An overview of the past performance of the Australian economy can be looked at through different perspectives.
In terms of how the country has been, performing based on GDP per capita Australia ranks in the sixth position from its sixteenth position in the early 1990s amongst OECD countries. An interesting fact to note about the Australian economy is that since 2005, the country’ s economy driving force has been the temporary boom factor, which accounted for 58% of the income growth (Taylor, et al, 2012).
During this period, Australia has also realized a 99% drop in productivity capital, leaving the country’ s income growth to be driven by resources, which accounted for 35% of the income. In addition, between 2005 and 2011, the country’ s economy experienced a decline of 0.7% annual productivity, compared to that between 1993 and 1999, which was an increase of 2.4%. What these overview data projects to the future of this country’ s economy are that the decline in productivity alongside the slow pace of boom is likely to drop the income growth by 0.5%.
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