Assignment - Macro Economics

Running head: MACRO ECONOMICS
MACRO ECONOMICS
Name of the Student
Name of the University
Author Note

MACRO ECONOMICS1
Table of Contents
References................................................................................................................................10

MACRO ECONOMICS2
a) The global economy which includes Australia is going down since Economic growth
of China continues to slow down(ABC News,2020). Global economic growth is likely to
reach a 8 years low of 2.5 per cent. It is deteriorated significantly due to US-China trade war.
According to Fitch, it is likely to become 2.6 per cent in 2019 which is a noteworthy fall from
the previous year which was 3.2 per cent. In September, 2019, the economy of Australia
decelerated to the most lethargic stride in a decade. The growth was of 1.4 per cent which is
well below of what forcasted by the Reserve Bank. The official figures was published by
China which explains that its “trade war” with US was causing hurt to its economy. The GDP
of China rose at a 6.2 per cent which is the lowest in three decades. The economy of Australia
are indissolubly knotted to its trading partner China. According to the “Department of
Foreign Affairs and Trade”, in 2017-18, export of Australia of more than 30 per cent were
sold to China(Hatfield-Dodds and et al., 2015).
b) Macroeconomics is concerned with objectives which affect the whole economy. The
four major objectives are:
1. Full employment
2. A high and sustainable economic growth rate
3. Price stability
4. External Balance
1. Full Employment- When everyone in the economy who is willing to work can find jobs
that situation is called full employment situation. It has been observed that zero
unemployment is an impossible situation which is due to the existence of structural change
and frictional unemployment. “Frictional unemployment” is the unemployment which exists

MACRO ECONOMICS3
when people are in the procedure of changing from one job to another. “Structural
unemployment” is due to technical alteration rather than fluctuations in “demand or supply”.
In Australia, “the natural rate of unemployment” is the lowest rate which can be attained
without any “inflationary” pressures developing which appears about four per cent in
Australia. The growth rate of working age population of Australia decreased during the
1990s, which is mainly due to achievement of the “baby boomers” entrance in the pertinent
“age cohort”. The participation rate of women rose more sluggishly for the periods than they
used to have in the nineteen eighty’s. So, growth of the “labour force” was much lesser than
in the nineteen eighty’s. Employment growth was on average lower at 1.3 per cent per
annum. In the late 1989, “unemployment” was at a 10 years less which is below six per cent.
Pessimism about the forecasts for deteriorating “unemployment” grasped new highs.
“Unemployment” started to reduce in 1994.
2. A high and sustainable economic growth rate- The growth rate is significant in
explaining the nation’s future opportunity set. The rising capability of the economy to mollify
the wants and needs of its associates. The desirable growth rate is four per cent. The
economic growth is usually calculate by change rate in GDP. There is a sustainable rate is
between three to four per cent per annum. When the growth is very fast which leaks blocks in
the economy and will put severe pressure on prices. If the economic growth is too slow, then
resources are not completely utilised. In Australia, between 2005 to 2007 the thriving
economy saw low level of unemployment, there are shortage in skills in numerous sectors
and heaviness on prices. The suffering of Australia was not as much as other economies in
the year 2008. There was a average growth 3.5 per cent in the 1990s as a entire which was to
some extent greater than in the nineteen eight’s which is lesser than nineteen sixty’s by a very
decent margin. By comparing the growth of 1990s with growth of 1980s, the difference is no
much in terms of “average output growth”. There is a difference which is greater in the