Economics Assignment | Economics for Business Assignment
Added on - 28 May 2020
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Running head: ECONOMICS FOR BUSINESSEconomics for businessName of the studentName of the UniversityAuthor note
1ECONOMICS FOR BUSINESSIntroduction:Unemployment is one of the persistent phenomenons that every economy around theworld faces over the time. Depending upon the various factors like economic growth rate, growthof industry, growth of population, rate of unemployment tends to fluctuate over time gradually(Schmieder, von Wachter and Bender 2016). Unemployment is such a phenomenon that pausethe economic growth and influence the disposable income negatively. With higher rate ofunemployment, income of the households tends to fall and the aggregate demand in the economydrops as well (Wiemers 2014). Reducing aggregate demand tends lower level of employmentand the cycle continues until either government steps in to control the situation or the economybreaks down. Thus, with higher unemployment level, households fail to fulfil their requirements,leading the economy towards breakdown. Now, when it comes to Australian economy, then itcan be seen that the economy has faced persistent effect of unemployment since 1984, whenunemployment level was as high as 10% (Morris and Wilson 2014). Successive governmentplans has helped the country to reduce the magnitude of unemployment and presently the countryis one of the developed nations that has unemployment rate less than world average of 6% (Argyand Nevile 2016).This essay is meant to analyze the unemployment in Australia for last 5 years. Focus ofthe study will remain on the different conceptual types of unemployment in the country and findout what government has done so far in this last five years to control the effect of unemploymentin the country’s economy. Moreover, the essay will discuss the various factors that have affectedthe Australian economy during last five years. Besides this, the study will highlight somerecommendations to aid the economy to have the desired unemployment rate. To conclude, there
2ECONOMICS FOR BUSINESSwill be a summarized overview of the Australian labour market and a summary of the study sofar.Condition of Unemployment in Australia:Australia is one of the stable western nations that possess a lower amount ofunemployment as compared to the world average of 6%. With rise in Gross Domestic Products(GDP) and reduction in death rate has influenced the Australian economy to have lower amountof unemployment since 1970 (Hoffmann and Lemieux 2016). If the present unemploymentcondition of last five years can be observed, then it can easily be seen that unemployment levelhas dropped largely as compared to the 2009. According to the figure 1, it can be seen thatunemployment rate was lowest during 2012, considering the values of last five years; however, ithas crossed 6% during 2014 and 2015. One of the main reasons for this rise in unemploymentwas substantial easing of monetary policy since 2013.201220132014201520164.64.8126.96.36.199.866.2YearUnemploymentrateFigure 1: Unemployment of AustraliaSource: (Created by Author)
3ECONOMICS FOR BUSINESSAccording to the general economic theory, there is a negative relationship between theunemployment and GDP growth rate (Gregg, Machin and Fernandez 2014). From table 1, it canbe seen that Australian market promotes same picture and there has been substantial fall inunemployment due to rise in GDP growth. Correlation of -.900073354 determines strongnegative relationship between the Australian GDP growth and unemployment rate. Thus, if the isany change in the GDP growth rate, then there will be a change in Australian labour market too(Andresen 2015).UnemploymentrateGDPgrowthrateUnemploymentrate1GDP growthrate-0.9000733541Table 1: Unemployment and GDP growth rate correlationSource: (Created by Author)Present situation of the Australian labour market can be seen from the figure 2, wheregrowth rate of the country has been plotted with the unemployment rate. According to thedifference between unemployment rate and GDP growth rate, from the diagram 2, it can be seenthat, country had lowest unemployment rate and highest GDP during 2012 and highestunemployment and lowest GDP in 2015.