ECON910 T2 2019 Research Report: Australian Economy and Exchange Rate

This research report analyzes the Australian economy based on the article "Economy up, house prices down." It examines the main issues discussed in the article, including the slowing global growth and its impact on the Australian housing market. The report also discusses the costs and benefits of falling house prices on the Australian economy, considering the impact on consumer confidence, construction, and economic growth. Furthermore, it defines and explains the four key national macroeconomic objectives (real GDP growth, unemployment, inflation, and exchange rate), using quarterly or monthly data from the last three years to assess the Australian economy's performance and future trajectory. The report also explores the effects of the recent drop in the Australian dollar (AUD) on an Australian firm importing building materials from the United States, and discusses the broader implications of AUD depreciation on the Australian economy. Finally, it considers actions the Reserve Bank of Australia (RBA) could take to stabilize the exchange rate at US 80C per AUD, including the effects of those actions on the housing market, and the role of interest rates and inflation control.