FNSINC601 – Apply economic principles

Running head: ECONOMICS
Economics
Name of the Student
Nam of the University
Author’s Note

ECONOMICS1
Table of Contents
Introduction......................................................................................................................................1
Stage of economic cycle..................................................................................................................2
GDP growth of the Australian economy.........................................................................................3
Unemployment trends in the Australian economy..........................................................................5
Inflation trends in Australian...........................................................................................................6
Consumer and business confidence.................................................................................................7
Interest rate trends............................................................................................................................9
Economic cycle phase in Australia is at present............................................................................10
Conclusion.....................................................................................................................................10
References......................................................................................................................................11

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Introduction
The present essay intends to analyze on which stage of economic cycle do the Australian
economy is at present. The economic cycle relates to the economic fluctuation in trade,
production and other economic activities between the periods of contraction and recession. It is
also refereed to as business cycle, which has four phases such as- expansion, peak, contraction
and trough. Several macroeconomic factors including- GDP, unemployment level, rate of
interest, inflation rate, consumer and business confidence helps to determine the present stage of
economic cycle in an economy. This study focuses on these macroeconomic factors for
determining the stage of economic cycle at which the Australian economy exists. This study will
help to provide an overview on how economic climate impact the prospects of a company.
Overall, this essay will highlight how the investors make investment for purchasing enterprises
technology and other capital products.
Stage of economic cycle
There are four stages of economic cycles such as- expansion, contraction, peak and
trough. All nations across the globe experience ups and downs in growth of jobs, output,
consumers spending and income. The economic cycle mainly begins from trough, passes
through recovery phase, followed by expansion and then reaches peak. After reaching peak
point, there comes the declining stage of recession. In this way the economic cycle continues
with ups and downs (Taussig 2013).
Expansion- In this stage, there is rise in different factors that includes- employment, wages,
employment, output and economic growth. Besides this, price of certain factors of production as
well as output enhances simultaneously. In this stage, the debtors are in better financial condition
for repaying their debts and thus creditors lend fund at high interest rate. Moreover, there is also

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rise in investment opportunities and thus some funds of an enterprise are used for different
investment purposes. This phase continues in an economy until economic conditions becomes
favorable.
Peak- Growth in expansion phase slows down and afterwards reach to peak stage. This is highest
point in economic cycle when an economy is manufacturing at maximum output or above full
employment. In this stage, the economic factors including production, employment, sales
becomes high. In this stage, there is gradual decline in demand for goods owing to rise in input
prices.
Recession- After the peak stage, there occurs gradual decline in demand for different goods
owing to rise in input prices. When decline in demand for goods becomes high, the recessionary
stage occurs. In this phase, all economic factors including prices, investment begins to fall. The
producers becomes unaware of decline in product demand and thus they continue to manufacture
products. In this situation, supply of goods exceeds that of demand for goods (Sloman, Norris
and Garrett 2013).
Trough- During this stage, economic activities of the nation decrease below normal level. In this
stage, growth rate of specific economy becomes negative. Moreover, in this stage, there occurs
huge decrease in national income as well as expenditure. Besides this, the economic output of the
nation also becomes low as well as unemployment becomes high.