The Impacts of Macroeconomic Variables on Economic Growth

Running Head: Macroeconomic Variables
The Impacts of Macroeconomic Variables on Economic Growth
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Macroeconomic Variables 2
Contents
Introduction......................................................................................................................................3
Gross Domestic Product (GDP) and Economic Growth.................................................................3
Article..........................................................................................................................................3
Summary......................................................................................................................................3
Analysis.......................................................................................................................................3
Inflation and the Price Level............................................................................................................4
Article..........................................................................................................................................4
Summary......................................................................................................................................4
Analysis.......................................................................................................................................4
Wages and Unemployment..............................................................................................................4
Article..........................................................................................................................................4
Summary......................................................................................................................................4
Analysis.......................................................................................................................................5
National Saving and Capital Formation..........................................................................................5
Article..........................................................................................................................................5
Summary......................................................................................................................................5
Analysis.......................................................................................................................................6
Short-term Economic Fluctuations and Aggregate Expenditure.....................................................6
Article..........................................................................................................................................6
Summary......................................................................................................................................6
Analysis.......................................................................................................................................6
Conclusion.......................................................................................................................................7
Bibliography....................................................................................................................................8
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Macroeconomic Variables 3
The Impacts of Macroeconomic Variables on Economic Growth
Introduction
Economy is studied using various fundamental indicators. Such indicators include
inflation and price levels, GDP, national income, growth rates, unemployment, aggregate
demand and supply and balance of payment. Following is a brief discussion of some of the
indicators of economic growth. Each variable has different impact on economic growth.
Gross Domestic Product (GDP) and Economic Growth
Article
Title: “2017-18 GDP growth rate of 2.9% confirms the resilience of our economy” (Tang,
2018).
Summary
Australia GDP recorded a growth of 2.9% during the fiscal year 2017-2018. In the
previous year (2016-2017) the GDP went up by 2.1%. The increase in growth rate was by 0.8%.
Australia has had a 27-year streak of growth since 1992. It is the only country among major
developed economies that has not had an economic recession since then (1992). The country also
has the highest annual average growth rate of 3.2% among developed countries in the period
1992-2018. Both the USA and the UK has 2.1%, Canada 2.5 percent, New Zealand 3.1%,
Germany and Japan has 1.4 and 0.9% respectively. It is projected that the next 4 years up to
2022, Australia will have even more growth than ever
Analysis
GDP is one of the indicators of economic performance (Fraumeni, 2017). Growth in GDP
indicates economic growth. A contraction in GDP indicates a poor performance in the economy.
Australia has subsequent growth in the GDP and hence economic growth since 1992. What this
means for investors is that the country has shown consistency and the likelihood of making more
money in Australia is very high compared to all other developed nations. If the economy
performs as projected, we shall see the Reserve Bank of Australia put stringent measures to
stabilize the economy since the financial sector was the biggest contributor to the growth.
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