Principle of Economics Course 2022

Running head: PRINCIPLE OF ECONOMICS
Principle of Economics
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PRINCIPLE OF ECONOMICS1
Table of Contents
Introduction......................................................................................................................................2
Comparative analysis of economic growth......................................................................................2
Influence of economic growth on inflation and unemployment rate...............................................4
Conclusion.......................................................................................................................................6
References........................................................................................................................................7
Appendix..........................................................................................................................................9

PRINCIPLE OF ECONOMICS2
Introduction
Primary objective of the research report is to evaluate macroeconomic variables such as
nominal GDP, inflation and unemployment rate for the selected group of countries for a
specified sample period. The selected countries for this purpose are Australia, Canada, New
Zealand and United States. The selected sample period ranged from 2006 to 2018. In order to
make a comparative analysis data are first collected on the selected variables. The paper first
briefly explains the trend in GDP growth rate of the four nations. After explaining the growth
trend the report attempts to evaluate the linkage of economic growth with unemployment and
inflation rate.
Comparative analysis of economic growth
The accounted growth rate of nominal GDP in Australia in the year 2006 was 2.79%.
economic growth increased at a faster rate for the two consecutive period of 2007 and 2008. The
recorded economic growth for the two years were 3.84% and 3.66% respectively. The rapid
economic growth in Australia during this time was due to mining boom that started since 2005. It
was the time when demand for mineral resources such as coal, iron ore and gas increased
significantly causing a considerable expansion of these resources. Demand of Australian
minerals during this time was largely driven by the emerging countries with share of China being
the most important (Battellino, 2020). The rapid growth caused from mining boom however
offset in 2008 by the global financial crisis of 2008. Economic growth rate declined to 1.94
percent in 2009. However, given a relatively strong financial system the impact of global
financial crisis did not last long and the economy recovered soon (Makin, 2019). Australian
economy again began to slow down the since 2013. It was the time when mining boom came to
an end and growth of China’s economy was started to fall. Nominal GDP growth in 2016 was

PRINCIPLE OF ECONOMICS3
2.77%. Growth however recovered since 2017 with growth being 2.37 percent and 2.94 percent
in 2018.
The nominal GDP growth rate in Canada in 2006 was 4.17% percent. Economic growth
in 2007 was increased to 6.87%. GDP growth rate however declined drastically during 2008 and
2009. The respective growth rate being 1.01% and -2.93% during this time. Economic downturn
of Canada during this period was due to hit of global financial crisis. The subprime mortgage
crisis of United States in 2008 had a spillover effect globally. Because of a relatively stable
financial system and a prudent risk management practice the economic recession due to global
financial crisis did not have a long term impact on Canadian economy (Bankofcanada.ca, 2020).
The economy soon recovered and recorded a growth rate of 3.09% in 2010. The nominal GDP
growth rate of Canada since 2012 continued to fall with growth being only 0.69% in 2015. The
underperforming growth rate of Canada during this time was result of several factors (Brown,
Davis & Mayes, 2016). Weak performance of the global economy due to uncertainty in United
States and threat from Euro area contributed to poor performance of private sector and slow
economic growth. Economic growth began to strengthen since 2016. Economic growth in
Canada recovered gaining support from strong energy export and ease monetary policy of bank
of Canada. The recorded economic growth in 2018 was 1.90% percent.
The economy of New Zealand grew at a rate of 2.84% in 2006. The relatively slow
economic growth was the result of series of economic events such as high price of oil, increase in
interest and trade disruption. Economic growth in 2007 however recovered due to increase in
domestic demand and boost in daily export. The economy however entered a recession in 2008
because of Global financial crisis. The economic experienced two consecutive years of negative
economic growth of -1.01% and -0.21% in 2008 and 2009 respectively. Because of policy