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Impact of Interest Rates and Inflation PDF

   

Added on  2020-12-29

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ASSESMENT ON GDP OFAUSTRALIA

Table of ContentsINTRODUCTION................................................................................................................................3TASK 1.................................................................................................................................................31. Explain what a country’s GDP is and how it can be measured...............................................3TASK 2.................................................................................................................................................52. Critique what economic growth means for a country.............................................................5TASK 3.................................................................................................................................................73. Analyse the relationship between labour markets, inflation and economic development......7TASK 4.................................................................................................................................................94. Investigate the basic principles of the financial markets and the impact of interest rates and inflation.......................................................................................................................................9CONCLUSION..................................................................................................................................10REFERENCES...................................................................................................................................11

INTRODUCTIONGDP stands for Gross Domestic Products, as it is the total value of goods and services whichare produced with in the boundaries of a specific nation. For example, total value of the productsand services produced by Australia under their nation boundary will be their GDP. For a nation it isvery much important to have high GDP, as this help them in gaining knowledge about thedevelopment rate of their country. Australia is one of the well developed nations of the world,whose maximum domestic products and raw materials is exported in China market. In this regard,any decrease or increase in China's GDP rate will impact on economy of Australia also. The presentreport is going to critically made a discussion on this topic, that argued on China's slow growth ratemay decrease Australian economy in 2019 to over 3%. Along with this, a study will take place onimportance of economic growth for a nation (Antal and van den Bergh, 2014). Also, relationshipbetween labour market, inflation and economic development will come in study. Along with all this,some basic principles of the financial markets and the impact of interest rates and inflation.TASK 11. Explain what a country’s GDP is and how it can be measured.GDP stands for Gross domestic products, it is known as the complete market value ofproducts and services, which are developed by different organisations performing their operations inboundary of nation. As GDP is very much important for a nation, it play a vital role in measuringthe total economy of a nation. It help the nation in finding the total dollar value of goods andservices produced by them in a particular time period. For a nation, it is very much important forthem to have to a constant growth in their GDP rate, as this will help them in making improvementin their economical conditions, so that they can develop on regular basis. Australia is one of themost developed nations of the world, and they have high GDP rate in last few years. This nationmainly export its domestic products in China's market therefore, dependence on Chinese economyis considered as blessing for Australian local economy, that improves living standard of localcommunities. GDP of nation was highest in year 2013 and was 1.57 lac corers USD, but it has beenanalysed that in year 2019, total GDP of nation will get decreased by about 3 percent (GDP ofAustralia, 2019). As per report given by Fitch Solutions, it has been estimated that weakeninghousing market as well as slowdown of economy of China results in decreasing the Australian GDPbecause due to back of a continued slowdown in growth of Chinese market will directly impact ondemand for Australia’s exports that includes mainly mining products. The biggest exports ofAustralia's domestic product are coal and iron ore therefore, both manufacturing industries ofdeveloping and developed countries are mostly depended on export of this nation. It majorly

exports such products to China market i.e. near about 31pc of goods, Japan includes 13pc and over6pc in South Korean market (Australia's fortunes are linked to China's economy — for better orworse. 2019). But due to trade war, economy of these three countries are majorly impacted thatresults in slowdown of economy. Therefore, GDP rate of Australia may also decreases in currentyear (2019) due to such conditions. Also, GDP has been divided into two different parts, one is nominal and another is real.They both are very much related but not same, when a nation like Australia use to describe theirGDP, then it do not clear which type of GDP it is. In major cases, GDP declared by a nation isnominal GDP (Asher and Bali, 2015). It is a type of GDP where nation use to consist both pricesand growth of that nation. Where as, real GDP of a nation consist only growth of that country.Difference between nominal GDP and real GDP is given beneath :-Basis for ComparisonNominal GDPReal GDPMeaningNominal GDP is a type of GDPwhich have all the aggregatedvalues of products and servicesproduced in boundaries of anation in some specific timeperiod.Where as, real GDP is a type ofGDP which consist of only truegrowth of the nation afterproducing all these productsand services.What is it?This is a type of GDP which donot have any affect of inflationon them (Bajada, 2017).Where as, this GDP is definedafter making all the adjustmentsof inflation.Expressed in Nominal GDP is expressed inthe prices of products andservices in current year only.While on other hand, real GDPis expressed on the basis ofconstant prices or can be onprices of products and servicesin base year.ValueThe value of nominal GDP iscomparatively higher than realGDP.The value of real GDP isgenerally low as compared tonominal GDP of a nation.UsesThis is used by a ntion, so thatthey can a comparison betweendifferent quarters of a year.Where as, real GDP is used formaking comparison betweentwo or mow different financialyears.Economic growthBy the use of nominal GDP it isvery difficult for a nation toWhile on other hand, real GDPis known as very good

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