Economic Performance of Australia: Analysis of Production Output, Labour Market and Price Level

This document provides an analysis of the economic performance of Australia with a focus on production output, labour market and price level. It includes information on GDP, unemployment rate, inflation rate and government policies. The document also includes a reference list.

Running head: ECONOMICS
Economics
Name of the student
Name of the University
Author note

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Table of Contents
Introduction................................................................................................................................2
Production output performance analysis....................................................................................3
Labour market analysis..............................................................................................................4
Price level analysis.....................................................................................................................6
Conclusion..................................................................................................................................7
Reference list..............................................................................................................................9

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Economic performance of Australia
Introduction
The economy of Australia is known as the mixed market economy. It is known to
have a very high gross domestic product in the previous year. The total amount of wealth in
the previous year was found to be around more than AUD$8 trillion. The service sector
mostly dominates the Australian economy which comprises of the sixty percent of gross
domestic product and also known to employ a huge number of labour force. Beside the
service sector, the manufacturing industry is also known to contribute huge amount to the
gross domestic product in Australia. Australia’s GDP is known to greater than that of New
Zealand or Netherlands. The mining sectors and the agricultural sectors of Australia are
known to account more than fifty percent of the export although the economy of Australia is
mostly dominated by the service sector and the manufacturing sector. The Australian
Securities Exchange is known to be one of the integral part of the economy. Large amount of
natural resources, stable government along with proper political system, will help Australia
for the long term growth. This country is also known to rank first in the regions of Asia
Pacific for industrial productivity and labour. The presence of strong demand of goods by the
Australian people and the favourable global conditions help Australia to grow fast. The
economic growth are mostly driven by the government spending and consumption of the
household. Australia is known to enter into the free trade agreement with some of the
countries of ASEAN. High level of economic growth in Australia resulted from the growth of
the mining sector. This particular sector have known to grow continuously and will benefit
strongly. The mining boom will also be taking place after few years in the economy.

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Production output performance analysis
The gross domestic product in case of Australia have known to increase over the
decade. The gross domestic product had been the highest in the year in 2015. The rate shows
that it is increasing from the year 2005 to 2014. The same goes for the value of gross
domestic product per capita. It have also increased from 2005 to 2015. The gross domestic
product per capita is measured at constant 2010 US$. The value of the gross domestic product
have known to decline in the year 2009. For this reason, while evaluating the value of the
growth rate of real gross domestic product per capita was negative in the year 2009. The
increase in the growth of the gross domestic product per capita was also not increasing at the
increasing rate every year.
The real gross domestic product per capita are used for evaluating the output of the
economy which is known to get divided by the population of that particular country. The real
gross domestic product can be also used for comparing the living standards between the
various countries. On the other hand, the value of the gross domestic product is termed as the
monetary measure which are known to have produced in a given period of time. It can be

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evaluated with the help of income approach, production approach and the expenditure
approach. The real gross domestic per capita are mostly used for analysing the performance
of the economy. For this reason both the real gross domestic product and the gross domestic
product per capita will be used for examining the performance of the economy. For this
reason, it can be said the real gross domestic product is known as one of the primary
indicators in order to evaluate the health of the economy. There are two types of gross
domestic product, one is the real gross domestic product and nominal gross domestic product.
The values of the gross domestic product are used to monitor the level of output. However,
the real GDP per capita are used for measuring the changes in the output of the economy
since it is known to track the total amount of value produced at the constant prices by
isolating the impacts of the changes in the price.
The economic growth can be measured with the increase in the gross domestic
product that is a combination of the value of the goods and services of the economy. This
can help in contributing the economic growth. When the economy is known to experience the
growth, it will be known to grow at a constant rate. Through infrastructure spending, tax
rebates, tax cuts as well as deregulation the government can help in economic growth. When
there will be presence of more cash in the economy, it will help for improvement in
technology, expansion, growth and procurement of capital. The government can also
stimulate the economy through deregulation.
Labour market analysis
Year
Unemployment
rate of Australia
(%)
2005 5.03000021
2006 4.78000021
2007 4.380000114
2008 4.230000019
2009 5.559999943

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2010 5.210000038
2011 5.079999924
2012 5.21999979
2013 5.659999847
2014 6.070000172
The situation when the people are known to actively look for employment and are not
presently employed are known as the rate of unemployment. The unemployment rate is
known to calculate by dividing the number of total unemployed people with the total labour
force. The unemployment can either be frictional, cyclical or structural in nature. Both the
structural and the frictional types of unemployment will be known to be the natural rate of
unemployment. The other types of unemployment can be either structural unemployment,
frictional unemployment, cyclical unemployment or seasonal unemployment in nature. The
frictional type of unemployment happens when there will be variation in the demand patterns
in the economy which will be present in the production pattern. Therefore, it can be said that
the frictional unemployment will be taking place due to the changes in demand.
The above table shows that the rate of unemployment in Australia have been mostly
around 5 to 6 percent. The rate of unemployment had been the least in the year 2008. The
unemployment rate had been the highest in the year 2014. The rate have started to decrease
after 2005. However, the level of unemployment in Australia from 2005 to 2014, known to be
five percent. The reasons for the unemployment can either be frictional or structural in nature.
Usually the government uses the fiscal measures for attaining full employment in any
particular country. The variation in the amount of tax with the government spending will be
used in order to promote full employment in the economy. One of the aim of the government
is maintain full employment in the economy where the government aims for low inflation in
the economy. Full employment is the economic situation where all the resources are used

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efficiently. The tax policies used by the government are used for economy stabilization. The
government also known to use discretionary fiscal policy in order to maintain automatic
stabilization.
Price level analysis
Year
Inflation
rate of
Australia (%)
2005 2.69183168
3
2006 3.55528773
7
2007 2.32761128
9
2008 4.35029855
2009 1.77111716
6
2010 2.91834002
7
2011 3.30385015
6
2012 1.76278015
6
2013 2.44988864
1
2014 2.48792270
5
The rate of inflation in Australia have known to remain 2 to3 percent for most of the
years in Australia. The targeted rate of inflation in Australia is 2 percent. Therefore, Australia
is known to achieve the targeted rate of inflation for most of the years. The rate of inflation
had been quite low in the year 2007 after that it has increased to 4 percent in 2008 which is
known to be the highest. The inflation rate had been the least in 2012 which was around 1.76
percent. For this reason, it can be said that Australia will be experiencing the targeted
inflation rate for almost all the years.

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The increase in the prices of the goods and the services which takes place over time
is known as inflation. It is known to reduce the purchasing power for a single unit of the
currency. The inflation rate is the percentage decrease or increase of the prices over the
period of time. There are mainly two types of inflation, one of the demand pull inflation and
the other is the cost push inflation. The devaluations, rising wages along with the
expectations of inflation are main reasons of the inflation in the economy. The other reasons
are increase in the price of the consumer goods and services which takes place as a result of
the cosh push effect. The increase in the cost of the commodities resulted due to rise in the
rates of the values of the exchange rates. The demand pull inflation results at that point when
the demand is going to increase on a large scale which will be rising rapidly.
One of the factors of inflation takes place as a result of increase in the rates of wages.
The Australian inflation resulted from the high price of fuels and the health cost of Australia.
The interest rate rises which resulted as the rise in the fuel prices.
The government will be controlling the inflation through monetary policy since it is
known to be one of the common measure that is used by the government in order to control
the rate of inflation in the economy. The Reserve Bank of Australia will be known to raise the
interest rate for controlling the inflation in the economy. The government will be raising the
amount of tax in order to control inflation in the economy. The government will also be using
the monetary measures and fiscal measures for controlling the economy. By reducing any
kind of unexpected expenditure, raising the amount of tax and savings, the government will
be controlling he rate of inflation in the Australian economy.
Conclusion
It can be said the economy of Australia will be remaining strong. The real gross for
many years. The value of the Australian GDP have started to increase since 2005. The gross

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domestic product per capita of Australia had been on the higher side from 2005 to 2015. In
the year 2009, the value have known to decline slightly. Unemployment in Australia was
around 4 to 5 percent for the decade which suggests that the rate was not too high. The
economic growth are mostly driven by the government spending and consumption of the
household The rate of inflation in Australia for the 10 years had been stable in nature and
stays around 2 to3 percent which is also known as the targeted rate of inflation. The rate of
inflation had been the highest inthe year 2014 where the rate of inflation was known to be the
highest in that particular decade. Therefore, it can be said that the stable government, huge
amount of the natural resources and the healthy politics will help in the growth of the
economy of Australia.

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Reference list
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812.
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Economics and Finance Research Paper.
Burdekin, R. C., & Tao, R. (2018). Chinese Liquidity Effects on the Australian
Macroeconomy, 2002-2017. Claremont McKenna College Robert Day School of
Economics and Finance Research Paper.
Fountas, S., Karatasi, P., & Tzika, P. (2018). Economic Policy Uncertainty in Greece:
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Robinson, T., Tsiaplias, S., & Nguyen, V. H. (2016). The Australian Economy in 2015–16:
Uncertainties and Challenges. Australian Economic Review, 49(1), 5-19.

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Śmiech, S., Papież, M., & Dąbrowski, M. A. (2015). Does the euro area macroeconomy
affect global commodity prices? Evidence from a SVAR approach. International
Review of Economics & Finance, 39, 485-503.
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