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Economic Environment of Australia

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Added on  2021-02-19

Economic Environment of Australia

   Added on 2021-02-19

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ECONOMICS
Economic Environment of Australia_1
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1MAIN BODY...................................................................................................................................1CONCLUSION................................................................................................................................1REFERENCES................................................................................................................................2
Economic Environment of Australia_2
INTRODUCTIONMacro economic environment of Australia and monetary policy of Australia.Macroeconomics deals with overall economics about the market system operating over alarge scale. It deals with factors like price levels, inflation economic growth rate gross domesticproduct, national income and unemployment changes. In year 2018-19 Australian economy hasslowed down because of housing downturn and drought. The growth rate has gone down morethan expected levels leading to downward revision of GDP rate and inflation. As per forecastsover 2019-20 GDP rate will be around 2.4 approx where inflation are expected to be around 2%. Risks related to trade policies have remained and can weigh over growth rate aboveexpectations (Borio, 2017). Though the global financial conditions are becoming muchaccommodative after the turn of year these conditions can lead to more stronger growth. Reserve Bank of Australia (RBA) has brought down the interest rate to 1 percent which isthe lowest ever. The 2 cuts of 25 basis point consecutively over months is the 1st rate changefrom August 2016. The cuts were surprising as the RBA indicators showed rates to go up ratherthan falling down. The essay will cove an overview of Australia economy, objectives ofAustralian monetary policy, function of RBA and effect of cash rate on economy and thecircumstances in which it is decreased or increased.Key macro-economic goal and overview of Australian economy. Australian economy is aiming at sustainable and steady economic growth ratemaintaining a trend rate of around 3% increasing the living standards. It aims at maintainingstable prices and low inflation of 2% to 3%. To have 0 cyclical unemployment and also reducingthe natural unemployment rate. To have equal income distribution without loss of workincentives. External performance such as balance of payments, exchange rate and foreign liabilitiesare not included in government objectives as they just reflect participation of Australia in globaleconomy. (i) Current trendsEconomic growth rate- Current growth rate of Australia is 2.1% which is 0.7% down from theyear 2018. Australia became biggest country with highest median wealth per each adult in 2018.Since 1991 to 2019 economy of Australia grew by 3.2% average rate yearly in real term which is1
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