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Business Economics | Assignment

   

Added on  2020-05-16

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Running head: BUSINESS ECONOMICS Business EconomicsName of the StudentName of the UniversityAuthor Note

1BUSINESS ECONOMICS Macroeconomic Performance of the economy of Australia The primary indicator of the economic performance of any country is the Gross DomesticProduct of the country, which in turn is dependent on several other economic variables and theirdynamics. Keeping this into consideration, the assignment tries to analyze the macroeconomicperformance of one of the most stable and developed economies in the global framework, theeconomy of Australia (Dyster and Meredith, 2012. For assessing the same, the Real GDP(Inflation adjusted GDP) of the country is taken for the time period 1990-2015, and itsrelationship with the indicators like unemployment, inflation, net exports, cash rate and exchangerate of the country is analyzed. The following table shows the correlation between the Real GDP and the above-mentioned indicators of Australia, within the period of consideration: Table 1: Relationship between Real GDP and different economic variables Correlation between Real GDP and different economic variables Real GDPgrowth rate CashRate Unemployment rateRate ofinflation Exchange rate Netexports Growth Rate of Real GDP 1Cash Rate -0.081Rate of Unemployment -0.130.281Rate of inflation -0.030.64-0.231Exchange rate 0.200.040.260.081Net exports 0.230.260.55-0.020.851

2BUSINESS ECONOMICS Real GDP growth rate and Rate of Unemployment The correlation between the unemployment rate and the Real GDP, as can be seen fromthe above table is -0.13, which indicates towards a negative relationship. 1990199520002005201020152020-2.000.002.004.006.008.0010.0012.00Growth rate of Real GDP and Unemployment Rate Real GDP growth rateUnemployment rateYearRate(%)Figure 1: Unemployment and Real GDP of Australia(Source: Data.worldbank.org, 2018)A roughly inverse relationship can be observed between the concerned two variables,with the rate of unemployment decreasing until 2008, then slightly increasing, and the Real GDPmaintaining a stable growth rate. Cash rate and Real GDP The cash rate is the interest rate which the Reserve Bank of Australia charges from theother banks in lieu of money lent to them (Dyster and Meredith, 2012). The same, beingmaintained at a moderately low rate (2.13% in 2015) in the recent periods is seen to have inverserelation with the Real GDP with the correlation coefficient being -0.08.

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