Economic Factors Influencing Life Satisfaction

This assignment analyzes the economic factors affecting life satisfaction in Greece. It explores various indicators such as GDP growth, inflation, unemployment rates, and education attainment levels. The analysis highlights challenges like low GDP growth, high unemployment, and environmental pollution, which negatively impact well-being. Furthermore, it emphasizes the importance of education in fostering economic development and improving life satisfaction.

Running head: ECONOMIC ANALYSIS
1
Economic Analysis
Student’s name
Professor
Course
Date

ECONOMIC ANALYSIS
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Question one
Table 1: GDP per capita (constant 2010 US$)
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Australi
a
48702
.735
4941
8.686
5095
2.46
7
5178
8.44
0
5165
1.22
3
5187
4.080
5237
2.15
5
5334
8.38
9
5379
8.35
9
5439
4.334
5494
1.91
1
5567
0.92
4
German
y
38969
.322
4045
6.857
4183
1.86
7
4236
5.09
7
4008
6.10
5
4178
5.557
4412
5.33
1
4425
9.26
0
4435
4.73
7
4487
4.881
4525
3.59
6
4555
1.51
4
Greece 27698
.511
2917
6.393
3005
4.88
9
2987
4.74
3
2851
4.81
0
2691
7.759
2449
5.71
1
2283
0.52
7
2225
1.25
7
2247
9.009
2257
8.01
5
2273
6.45
5
Singapo
re
40020
.260
4222
3.891
4419
1.23
8
4265
0.10
2
4113
3.30
0
4656
9.680
4844
7.68
1
4910
3.70
9
5073
1.29
7
5186
5.718
5224
4.58
6
5260
0.64
1
Source: The World Bank
Table 2: Australia’s GDP growth, Inflation, and Unemployment rates
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
GDP growth
(annual %)
3.20
4
2.97
8
3.75
0
3.69
8
1.81
2
2.00
6
2.37
3
3.63
4
2.57
0
2.60
9
2.42
2
2.76
6
Inflation rate 3.70
9
5.06
5
4.97
6
4.53
6
4.92
5
1.01
0
6.18
4
2.05
5
-
0.16
7
1.43
9
-
0.70
2
-
0.41
4
Unemployme
nt rate
5.03
3
4.78
2
4.37
7
4.23
4
5.56
1
5.21
1
5.08
1
5.22
1
5.65
6
6.07
4
6.06 5.73
8
Source: The World Bank
Table 3: Germany’s GDP growth, Inflation, and Unemployment rates
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
GDP growth
(annual %)
0.70
7
3.70
0
3.26
1
1.08
2
-
5.61
9
4.08
0
3.66
0
0.49
2
0.49
0
1.59
5
1.72
1
1.86
7
Inflation 0.62
1
0.30
4
1.69
7
0.83
9
1.75
7
0.75
8
1.07
0
1.54
0
1.96
5
1.83
2
1.96
9
1.44
4
Unemployme
nt
11.1
67
10.2
5
8.65
8
7.52
5
7.74
2
6.96
6
5.82
4
5.37
9
5.23
1
4.98
1
4.62
4
4.31
1
Source: The World Bank

ECONOMIC ANALYSIS
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Table 4: Greece’s GDP growth, Inflation, and Unemployment rates
200
5
200
6
200
7
200
8
200
9
2010 2011 2012 2013 2014 2015 2016
GDP growth
(annual %)
0.59
9
5.65
2
3.27
4
-
0.33
5
-
4.30
1
-
5.479
-
9.132
-
7.300
-
3.241
0.353 -
0.219
0.012
Inflation 2.24
0
3.49
5
3.42
3
4.34
5
2.57
0
0.673 0.798 -
0.370
-
2.352
-
1.848
-
1.044
0.097
Unemploym
ent
9.99
4
9.00
8
8.39
6
7.76 9.61
6
12.71
3
17.86
5
24.43
9
27.46
6
26.49
1
24.89
7
23.90
9
Source: The World Bank
Table 5: Singapore’s GDP growth, Inflation, and Unemployment rates
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
GDP growth
(annual %)
7.48
9
8.86
0
9.11
2
1.78
8
-
0.60
3
15.24
0
6.22
4
3.87
1
5.00
1
3.57
2
1.93
3
1.99
6
Inflation 2.22
6
1.72
0
5.86
1
-
1.49
2
3.52
1
-
0.046
1.23
3
0.36
0
-
0.23
9
-
0.41
0
2.53
8
-
1.43
5
Unemployme
nt
5.59 4.48 3.9 3.96 4.3 3.1 2.9 2.8 2.8 2.80
1
1.69 1.82
9
Source: The World Bank

ECONOMIC ANALYSIS
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Question two
Economic Analysis
Graph 1: Australia’s economic outlook (2005-2016)
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
-2.000
-1.000
0.000
1.000
2.000
3.000
4.000
5.000
6.000
7.000
Australia
GDP growth (annual %)
Inflation
Unemployment
%
Source: Table two
GDP Growth and Unemployment Rate
The relationship between Australia’s Gross Domestic Product and the Unemployment rate is in
agreement with Okun's law, that is, there is a negative correlation between Gross Domestic Product
growth and unemployment (Arnold, 2013). Between 2005 and 2008, unemployment in Australia was on
the decline. In 2005 unemployment rate was 5.03% and 4.54% in 2008. In the same period, the Gross
Domestic Product expanded, that is, from 3.20% in 2005 to 3.70% in 2008 (The World Bank, 2017).
Similar trend was recorded in 2010 to 2011 and in 2015 to 2016. On the other hand, unemployment
levels were high in 2009, 2013, 2014 and 2015. Consequently, during these financial years, the economy
of Australia slowed down.

ECONOMIC ANALYSIS
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This kind of correlation shows the importance of employment in accelerating economic growth.
A decline in unemployment is an indication that employment rate is high. Thus, when more people are
employed, the consumption and investments in an economy will increase resulting in growth in the
aggregate demand and hence a rise the real Gross Domestic Product (Sloman, Wride, & Garratt, 2015).
Between 2005 and 2016, the lowest economic growth in Australia was recorded in 2009, that is, 1.81%.
This weak growth was caused by the Global Financial Crisis of 2008-2009. The decline in demand during
this crisis resulted in a drop in the aggregate demand and hence a rise in unemployment and slowdown
in economic growth.
GDP Growth and Inflation
In some years, inflation and GDP growth exhibited positive correlation while in other years,
these variables moved in a different direction. For example, in 2013, the economic growth was 2.57%
compared to 3.63% growth recorded in 2012. Similarly, inflation in 2013 was -0.17% compared to 2.06%
of 2012. This scenario exhibits that a drop in the real GDP resulting from a decline in the aggregate
demand results in a decrease in the price levels. However, in 2009, inflation increased as the economy
slowed down. This correlation can be attributed to expansionary monetary and fiscal policies introduced
by the government of Australia during the Global Financial Crisis (GFC) (Australian Government, 2015).
These expansionary policies increased the amount of money in circulation and hence higher inflation.
Unemployment and Inflation
There is a tradeoff between inflation and unemployment rate. When unemployment declines,
inflation increases and when unemployment rises, inflation falls. In 2005, the level of unemployment
was 5.03% whereas inflation stood at 3.71%. On the contrary, in 2011 inflation was higher, 6.18%
whereas unemployment was low, 5.08% (The World Bank, 2017). This tradeoff between unemployment
and inflation results from government policies of stabilizing the economy. When the government wants
to reduce unemployment, it deploys expansionary economic policies. Such schemes stimulate demand
leading to growth in the economy and employment creation. Inflation occurs when the aggregate supply
fails to respond to the surging demand. Further, the use of contractionary policies to reduce inflation
often results in a rise in unemployment (Goodwin, Nelson, & Harris, 2014).

ECONOMIC ANALYSIS
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Graph 2: Germany’s economic outlook (2005-2016)
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
-10.000
-5.000
0.000
5.000
10.000
15.000
Germany
GDP growth (annual %)
Inflation
Unemployment
%
Source: Table three
GDP Growth and Unemployment
Between 2005 and 2016, unemployment in Germany has been on the decline though the
economy has been on slow down. In 2006, unemployment fell to 10.25% from 11.17% in 2005 following
an increase in economic growth of 3.70% from 0.71% recorded in 2005 similar trend was also observed
in 2010. This relation demonstrates that a rise in the output accelerates employment creation. However,
during the Global Financial Crisis, unemployment did not increase significantly although Germany’s
economy went into recession in 2009.
GDP Growth and Inflation
In the past one decade, Germany has had relatively low levels of inflation. The relation between
inflation and GDP growth varied in different years. For example, in 2006, Germany’s economy expanded
while inflation declined. It can be argued this economic expansion did result from an increase in the
aggregate demand. It may have resulted from supply side factors such as improvement in technology
and labor productivity. On the contrary, in 2008, Gross Domestic Product declined, and inflation also

ECONOMIC ANALYSIS
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dropped. It is evident that the decline in GDP resulted from a decrease in the aggregate demand and
that is why inflation also reduced during this financial year.
Unemployment and Inflation
From 2005 to 2016, unemployment exceeded the level of inflation. However, it should be noted
that unemployment rate in this country is also on the decline. The low inflation in Germany is attributed
to low prices of oil (BBC, 2015). Reduction in oil price has resulted in a decrease in the cost of
production. As a result, the aggregate supply has grown leading to a decrease in the general prices and
increase in the real Gross Domestic Product and a rise in the employment rate.
Graph 3: Greece’s economic outlook (2005-2016)
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
-15.000
-10.000
-5.000
0.000
5.000
10.000
15.000
20.000
25.000
30.000
Greece
GDP growth (annual %)
Inflation
Unemployment
%
Source: Table four
GDP Growth and Unemployment
As the Gross Domestic Product has been declining, the level of unemployment in Greece has
been increasing. Unemployment started rising in 2009 during the Great Depression and reached high in
2013, 27.47%. The economic problems facing Greece are attributed to large external debt that has

ECONOMIC ANALYSIS
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negatively affected its credits worthiness and scaring investors. Therefore, low consumption and
investments have led to deterioration in the aggregate demand and economic growth.
GDP Growth and Inflation
The decline in the GDP growth has resulted in low levels of inflation and even deflation in some
financial years. With significant funds going in debt payment, Greece has remained with little finances to
stimulate investments and consumption in the economy. Hence, the aggregate demand has reduced
leading to a decline in the general prices and economic contraction.
Inflation and Unemployment
On the onset of Global Financial Crisis in 2008, unemployment started rising while inflation
began falling. This trend resulted from insufficient aggregate demand. When the total demand in an
economy reduces, there will be a decline in the Gross Domestic Product and price levels. Moreover, with
weak demand for products, companies scale back their production (Boyes & Melvin, 2012). Hence, the
demand for labor declines causing a rise in unemployment. In some severe situations, some companies
fire their employees and others may close down.
Graph 4: Singapore’s economic outlook (2005-2016)
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
-5.000
0.000
5.000
10.000
15.000
20.000
Singapore
GDP growth (annual %)
Inflation
Unemployment
%

ECONOMIC ANALYSIS
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Source: Table Five
GDP Growth and Unemployment Rate
A rise in Singapore’s GDP leads to a drop in the level of unemployment. For instance, in 2006,
GDP growth was 8.86% compared to 7.49% in 2005. This increase in Gross Domestic Product made
unemployment to decrease to 4.48% from 5.59% during the same period. Also, when the country’s
economy went into recession in 2009, unemployment rose to 4.30% from 3.96% (The World Bank,
2017). Therefore, GDP expansion plays a significant role in employment creation in Singapore’s’
economy.
GDP Growth and Inflation
Singapore is experiencing low levels of inflation and also deflation in a few financial years. The
country has been in a position to register remarkable economic expansion even during deflation. For
example, in 2010, Singapore’s economy expanded by 15.24% while inflation was -0.05%. This trend
shows that the expansion in GDP may have resulted from supply side factors such as improvement in
labor productivity and technological development. However, in the recent years, Singapore has
experienced moderate growth in GDP. Studies show that low levels of inflation and deflation have
contributed to this sluggish growth (LEE, 2015).
Unemployment and Inflation
There exist a negative correlation between unemployment and inflation in Singapore. When
inflation is low, the level of unemployment is high, and when inflation is higher, unemployment declines.
For instance, in 2005, inflation was 2.23% whereas unemployment stood at 5.59%. Similarly, in 2016,
unemployment was 1.83% whereas inflation was -1.44%. This relationship demonstrates that when a
country chooses to reduce unemployment, inflation will be high and when it targets inflation,
unemployment will soar.

ECONOMIC ANALYSIS
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Graph 5: Comparison
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
-15.000
-10.000
-5.000
0.000
5.000
10.000
15.000
20.000
25.000
30.000
GDP growth and Unemployment rates
Australia's GDP Growth
Australia's Unemployment
Germany's GDP Growth
Germany's Unemployment
Greece's GDP Growth
Greece's Unemployment
Singapore's GDP Growth
Singapore's Unemployment
%
Source: Table two, three, four and five
Differences
Impact of Global Financial Crisis (GFC)
These economies suffered differently during the Global Financial Crisis of 2008 and 2009. Among
these four countries, Australia faired on well as its economy did not go into recession. This country just
encountered a slowdown in economic growth, that is, from 3.70% in 2008 to 1.81% in 2009. Germany,
Singapore, and Greece went into a recession that the magnitude of contraction differed. Germany’s
economy contracted to -5.62%, Singapore -0.60%, and Greece -4.30. Moreover, unemployment level
during the Great Depression of 2009 differed from country to country. Greece registered the highest
level of unemployment, 9.62% while Singapore recorded the lowest rate 4.3%.
Recovery from Global Financial Crisis

ECONOMIC ANALYSIS
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The economic outlook of the four countries shows that their recovery from the effects of the
Great Depression of 2009 differs. For example, Singapore managed to recover quickly by registering a
remarkable economic growth of 15.24% in 2010 (The World Bank, 2017). Australia and Germany also
faired on well after the crisis. However, Greece has not yet recovered from the effects of this Global
Financial Crisis. Since 2009, the country’s economy has gone in a recession five times.
Similarities
Improvement in GDP Growth in 2015 And 2016
In the recent years, that is, 2015 and 2016, all these economies have recorded an increase in the
GDP growth. Australia’s GDP improved from 2.42% to 2.77%, Germany from 1.72% to 1.87%, Greece
from -0.22% and Singapore from 1.93% to 2.00% (The World Bank, 2017).

ECONOMIC ANALYSIS
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Question 3
Life satisfaction score
Australia Germany Greece
0
1
2
3
4
5
6
7
8 7.3 7
5.6
Life satisfaction score
Life satisfaction score
Grade
Graph 6: Data extracted from OECD
Graph 7: Living standards
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
0.000
10000.000
20000.000
30000.000
40000.000
50000.000
60000.000
GDP per capita (constant 2010 US$)
Australia
Germany
Greece
Singapore
GDP per capita (US. Dollars)
Source: Table one

ECONOMIC ANALYSIS
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Factors Influencing the Life Satisfaction Rate
Australia
Higher Disposable Income
Though money cannot buy happiness, it contributes to better living standards and hence greater
well-being. Australians have higher disposable incomes which enable them to have access to quality
housing, health, and education. The GDP per capita of Australia exceeds that of Germany and Greece
(The World bank, 2017). This scenario is an indication that Australians have higher living standards and
hence greater satisfaction.
Quality Support Network
Good personal relationships and contacts are vital for the well being of humans. Active
community and social networks are instrumental in availing the emotional support needed for better
existence. Studies show that 95% of Australians have someone to rely on and thus they have a quality
support network which contributes to their life satisfaction (OECD , 2017).
Education
Education is a key factor in economic and social development. Through education, individuals
gain the skills and knowledge required for labor participation. In Australia, education attainment rate is
77.1% meaning that most of the Australians have access to education (OECD , 2017). As a result, they
have access to jobs to earn income for their upkeep.
Environment
The quality of environment affects the well-being and health of individuals. An environment that
is highly polluted causes severe health problems. When it comes to air pollution, Australia has the
lowest rate is ranked one out of thirty-eight. Also, 94% of the Australians have access to clean water and
thus high life satisfaction.
Germany
Income

ECONOMIC ANALYSIS
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Like Australia, the GDP per capita of Germany is rising steadily. This scenario shows that the
living standards of persons in this country are on the rise. With better incomes, individuals have access
better health care, education, and housing units. Moreover, Germany has policies in place to low-paid
people.
Social Networks
In Germany, 92% individuals have someone to rely on in case they are in need of help (OECD ,
2017). Hence, there exist real social networks which enable people to get the needed emotional support
which contributes to the well being. The programs that help migrants to integrate into the community
are also contributing to life satisfaction.
High Education Attainment
86.9% educational attainment rate shows that a significant portion of Germany’s population has
access to education (OECD , 2017). Education plays a vital role in eliminating inequality in the society.
People get employed while others start their businesses ventures thus reducing problems associated
with poverty.
Better Health
Germany has a life expectancy of 81 years (OECD , 2017). This situation exhibits that the
leadership of this country has put in place mechanism to ensure that the citizens have access to better
health. Good health is, therefore, contributing to life satisfaction.
Greece
Income
Greece has a low life satisfaction ranking. Low income is one of the factors that contribute to
this low rate. Since the Global Financial Crisis, the GDP per capita of Greece has been on the decline.
Therefore, the standards of living are deteriorating resulting in dissatisfaction.
Support Network

ECONOMIC ANALYSIS
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In Greece, the quality support network rate is 83.4% which is below OECD average of 88% (OECD
, 2017). This is a sign of weak social networks which is likely to result in minimum economic
opportunities, lack of or little emotional support and finally, lead to feelings of isolation.
Environment
The low life satisfaction score in Greece is also attributed to environmental pollution. Air
pollution in this country is high, and that majority of individuals have no access to clean water. Great
amount pollution is known to cause health problems which are detrimental to the well-being of people.
Education Attainment
Education is vital for the social and economic development of a country. Greece’s educational
attainment rate is 68.3% which falls under the OECD standard of 76% (OECD , 2017). The low levels of
education are hindering the ability of the population to secure employment for their upkeep and thus
low life satisfaction.

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Bibliography
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http://www.bbc.com/news/business-30681319
Boyes, W. J., & Melvin, M. (2012). Macroeconomics. Mason, OH: South Western.
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GR-AU&start=2005
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end=2016&locations=AU-GR-DE-SG&start=2005

ECONOMIC ANALYSIS
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The World Bank. (2017). Unemployment, total (% of total labor force) (modeled ILO estimate). Retrieved
September 13th, 2017, from https://data.worldbank.org/indicator/SL.UEM.TOTL.ZS?
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