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Running head: ECONOMICS ASSIGNMENTEconomics AssignmentStudent’s NameCourse Code
1ECONOMICS ASSIGNMENTIntroductionGross Domestic Product (GDP) is the most accurate way of measuring the growth rate ofa country. It is the standard practice to calcite the GDP of a country and compares it with othersto get the current economic position of that country. GDP is defined as the total sum of all thegoods and services produced in the sovereignty of a particular country. This report is adiscussion about the GDP rate of Australia dating back ten years from now. Since it covers allthe aspects of economic system it becomes the most prominent indicator of the economy of acountry. GDP data from Australia is displayed by National Accounts and is computed byAustralian Bureau of Statistics which derives its data from System of National Accounts. GDP ofAustralia had a moderate growth rate before the economic crisis in 2008 (Al-mulali, Fereidouniand Sab 2013). Australia is known to be a free and robust market and has been like this sincelong. It has almost all the natural resources in abundance complemented by its governmentwhich looks after its economyin a vibrant manner. Presence of efficient legal system and well-structured bureaucracy has led to the entrepreneurial development of Australia which has kept itseconomy in a healthy and prosperous state. Australia has always been the favorite destination forinvestors for establishing business ventures and investing in projects of all kinds.As Australianindustries are open to foreign competition and the workforce available in the country isadequately skilled. Australian government has reduced their interference in many sectors ofeconomy which has made way for foreign investors to take part in the development of itseconomy. In the following report discussion about the GDP and economic growth of Australia isdone with complete analysis.
2ECONOMICS ASSIGNMENTBackgroundAustralia has a unique demography which has benefited it in more than one ways. It is acontinent country surrounded by ocean from all its sides. It has been one of the most well-to-doeconomies in the entire Asia-Pacific region. It has expanded its economy continuously since last25 years with some hindrances coming from the global financial crisis in 2008 (Plumb, Kent andBishop 2013). But even in those troubled times it came out without much damage. AustralianLabor Government has done some stimulus spending which has increased the deficit of thegovernment. Australia is known to be a competitive global market with a stronghold on sectorssuch as technology, services and high-end products of manufacturing. Mining, livestockproduction and agriculture are the major modes of production in Australia and is doneextensively. These factors are the major contributors to the economy of Australia and hence to itsgross domestic product. In support of this, it has been observed that Australia has madesignificant economic progress in the last decade with the help of strong macroeconomic policy,strong development in commodity base and structural reforms of the government.The standard ofliving of the citizens of Australia has increased due to which economic challenges havetightened.Computation of Australian GDPThere are three methods applied by the Australian Bureau of Statistics to calculate theGDP of Australia. The first one is approaches of income, thesecond one is the production andthelast one is expenditure. The approach for production contains all the values of produces andthe difference between services rendered and values of goods produced in the country. It alsoadds the consumption and taxes on the goods produced such as mineral oil, tobacco and taxesimposed upon them (rba.gov.au 2017). Subsidies on the respective products are subtracted to
3ECONOMICS ASSIGNMENTgive the final GDP. The expenditure method calculates the cost incurred on final consumption ofthe products which includes services as well as goods. This method also includes the finalexpenditure of households, total consumption expenditure of the government, formation ofcapital and next exports. Finally, the income method calculates the total revenue generated by theeconomy which includes compensation given by employees, thegross surplus in operations,mixed-income derived from taxes after deducting the subsidies on imports and production.Rebalancing Commodity Prices with GDPSince the time of commodity boom, theeconomy of Australia is rebalancing itself withthe help of currency depreciation and macroeconomic policies. Development of non-miningsectors of theeconomy has supported the growth to 3% and has even reduced the employmentrate.Interest rates in the country have been low which has increased the aggregate demand andhas allowed the investors to take risks (rba.gov.au 2017). This has resulted in price hikes in themortgage and lending.R&D As a Part of GDP