Comprehensive Report: Unemployment and Inflation in Australia

This report examines the current state of unemployment and inflation in Australia, analyzing key economic indicators and their interrelationships. It discusses the increasing inflation rate, comparing purchasing power over time and referencing data from the Australian Bureau of Statistics. The report delves into unemployment statistics, including employed and underemployed populations, and explores the impact of tariffs, government expenditure, and migration on the GDP and labor force. It also analyzes the effects of government policies and expenditure on aggregate demand, real GDP, and the potential for crowding out in the private sector. The report concludes by suggesting government interventions, such as vocational training programs, to address unemployment and promote economic stability.

Running Head: UNEMPLOYMENT AND INFLATION IN AUSTRALIA
INFLATION AND UNEMPLOYMENT IN AUSTRALIA
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UNEMPLOYMENT AND INFLATION IN AUSTRALIA 2
Report given by the Australian Bureau of Statistics consumer price index shows that the
rate of inflation has been increasing by 2.6 per year. The prices that were recorded in 2018 were
greater (87.8%) when compared to the ones for the year2016.The AU$ 100 in the year 2001 was
equal to the purchasing power of 2016 which stood at AU$ 187.8 (this was a clear margin of
AU$ 87.8 in this span of 16 years).if compared to the 2017 annual rate, the 2018 inflation rate is
now 1.80%.Given that this number remains constant, AU$100 in present would equalize,
AU$101.80% in 2019.
First hand data for this scheming is obtained from the Australia’s CPI which is provided
by the reserve bank of Australia (Australian Bureau of Statistics, 2014). In estimation,
approximately 2.575 million people are unemployed or under employed.as of January 2016, 13
million people are employed as reflected by the records. Approximately 7.8 million people are in
full time employment where else almost 3.9 million people are employed in part time and an
approximate of 1.3 million people are under employed. The rate of unemployment has steadily
increased by 0.5% as of now due to the high number of graduates seeking jobs, in estimate,2.6
million people in Australia are under employed or unemployed(Australian Bureau of
statistics,2014).

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UNEMPLOYMENT AND INFLATION IN AUSTRALIA 4
a) Upon introduction of tariffs, Australian GDP falls but the dollar will appreciate at
a lower rate. The fall of the GDP and the prices, will affect the growth performance of
real investments negatively. The root cause of the GDP breakdown is the fall of exports
in a greater margin than the exports. When the tariffs are raised, this opt the importers to
buy from other nations and the dollar reinforcement allows switching to the alternative
imports which are cheaper across the board. The prices relative to those of imports are
raised by the tariffs.
Demand increase for experts has the following effects in the real GDP and prices.
b) Exports are a consistent of aggregate demand .when the net exports increase, the
real GDP will increase as well and consequently affect the economic growth positively.
With increase of demand for wine in china for instance, the price for local goods and
expenditure will also increase. The increased expenditure will favor the domestic
businesses ,account deficit will also be determined majorly by the increase for wine
demand in china.(John,2006)
c) The government expenditure can be classified as both revenue and capital
expenditure. Capital expenditure is inclusive of payment of salaries to civil workers,
salaries paid to ministers and others. Expenditure on capital leads to formation of assets
in the economy like school, roads, and hospitals. If the budget incurs a deficit, it is a sign
of financial illness when the expenditures exceed (Australian Bureau of Statistics,
2014).the government expenditure on the hydroelectric power ought to lead to a steady
rise in taxes and therefore affect the aggregate demand. If the government increases its

UNEMPLOYMENT AND INFLATION IN AUSTRALIA 5
expenditure the GDP will increase as well as explained in the following text; the increase
in taxes will refute the impacts of rising government expenditure which would have no
impact on the aggregate demand. The rise in government expenditure and in tax as well
would lead to make the real GDP to increase.in recession period, the consumers decrease
their spending. Increase in expenditure of the government might lead to the multiplier
effect. If the government expenditure will provide jobs for the unemployed portion, then
it will have more income to spend and eventually result to an increase in the final GDP
more than the first injection. The latter will affect the growth of the prices and they will
go up.9Australian bureau of Statistics, 2014).
Suppose the economy is at full measure, and the government increases its expenditure,
this might result to crowding effect and in return the private sector will attract less
consumers leading to little or no increase in the aggregate demand shifting from the
private sector to government expenditure (John, 2014)
d) In the calculation of GDP, the net exports and imports ought to be always at
balance, with the net difference either rising or falling. If the number of exports outdoes
the number of imports, then the GDP is increasing. Increase in the GDP is also known as
the current surplus. The relative difference or the rate of alteration in the real GDP from
one phase to another is the growth rate in the GDP.Balancing of the imports and the
exports can make the GDP rise or fall and thus affect its growth rate. If the prices of oil
for instance fall in Australia, the GDP will encounter a slow rate of growth(Australian
Bureau of Statistics,2014)
e) Migration in Australia has been of great influence to the economy.it impacts the
size, and the geographic composition of workforce. The recent alterations in the

UNEMPLOYMENT AND INFLATION IN AUSTRALIA 6
migration scheme for Australia have a larger emphasis on skills and the increased rate of
temporary immigration. The number of emigrants has been more than the number of
immigrants in the recent past.it is yet to be established whether the number of immigrants
has direct influence on the real GDP and the general prices.labour force has been on
increase due to the increase in the number of immigrants. (John, 2006).The increase in
labor force will lead to rise in general prices. The real GDP will fall since the level of
reliance in the task force will rise with the increase in the rate of
unemployment(John,2006)
RATIONALE
With the ongoing rise in the rate of unemployment, the real GDP will still continue to
lower.it is of greater safety if the government encourages its citizens to engage in the artisan
scheme. The government should establish more learning center like schools and vocational
training centers whereby its subject will be given appropriate training and skills needed in the
current job market.it should also invent programs to customize the rate at which the immigrants
are coming in order to reduce the dependency level (John, 2006).

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References
Australian Bureau of Statistics. (2014, June 05). Australian Social Trends. Retrieved may 25th,
2017, from Australian Bureau of Statistics:
http://www.abs.gov.au/AUSSTATS/abs@.nsf/Lookup/4102.0Main+Features202014?
OpenDocument
John , S. (2006, may 17th). Economic Impacts of Migration and Population Growth. Retrieved
May 26th, 2017, from Australian Government Productivity Commission:
https://www.pc.gov.au/inquiries/completed/migration-population/report