Relationship between Real GDP, Inflation, Unemployment, Business Cycle and Net Exports in Australia

Running head: ECONOMICS ASSIGMENT
Economics Assignment
Name of the Student
Name of the University
Author Note

1ECONOMICS ASSIGNMENT
Table of Contents
Real GDP Growth Rate and Rate of Inflation, Australia...........................................................2
Unemployment Rate and Growth Rate of Real GDP, Australia................................................3
Presence of Business Cycle in the economy..............................................................................3
Real Exchange Rate and Net Exports........................................................................................4
References..................................................................................................................................6

2ECONOMICS ASSIGNMENT
Real GDP Growth Rate and Rate of Inflation, Australia
The Real GDP of a country, being the inflation adjusted measure of the total
productivity of the country, is one of the primary indicators of economic well-being of the
population in general and the health of the economy of the country. It measures the total
value of the final goods and services which are produced within the geographical boundaries
of the concerned country (Mankiw 2014). On the other hand, the rate of inflation denotes the
changes in the average price levels of a country and is another significant indicator of overall
well-being of the economy of the country as it highlights the conditions of the overall price
levels of the goods and services consumed in the economy, thereby indicating towards the
overall welfare of the residents of the same.
Keeping this into consideration, the relationship between the Real GDP Growth Rate
and the rate of inflation in case of one of the most significantly developed economies across
the globe, that is the economy of Australia, can be seen as follows:
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
-15.00
-10.00
-5.00
0.00
5.00
10.00
15.00
20.00
25.00
30.00
35.00
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00
Rate of Inflation and Real GDP Growth Rate, Australia
GDP Growth Rate Inflation Rate
Figure 1: Inflation and Real GDP Growth Rate (Australia), 1990-2016
(Source: Abs.gov.au 2018)
As is evident from the above figure, the Growth Rate in the Real GDP of Australia,
over the last few decades, have been subjected to considerable fluctuations and these
fluctuations have been negative and positive top. The growth rate reached negative values in
1993, 1998, 2001 and also in 2009, the last being mostly due to the Global Financial Crisis
which had immense negative impact on the overall economic condition of the country. The
Real GDP Growth Rate of the country can also be seen to be remaining negative from2014
till 2016. Again, impressive positive trends can also be observed in the years 1994-1997,
2002-2007 and also in 2010, the latter showing the fast recovery of the economy from the
recessionary situations of 2008-2009 (Kumar, Webber and Perry 2012).
Like that of the growth rate of Real GDP, the rate of inflation shows high fluctuating
trends and can be seen to be maintaining a more or less moderate range of values (mostly
between 1% to 4%) over the concerned period of time. However, in the periods of high GDP
growth rate, the inflation can also be seen to be increasing to some extent.