Three Key Facts about Economic Fluctuations Economic activity fluctuates from year to year. ----------------------------------------------- In most years production of goods and services rises. On average over the past 50 years, production in the U.S. economy has grown by about 3 percent per year. In some years normal growth does not occur, causing a recession. - A recession is a period of declining real GDP, falling incomes, and rising unemployment.
Reserve Bank of Australia (2010). Minutes of the monetary policy meeting of the board – 3 August 2010. Retrieved August 20, 2010, from http://www.rba.gov.au/monetary-policy/rba-board-minutes/2010/03082010.html. Reserve Bank of Australia (2010). Measures of consumer price inflation.
Inflation can be described as the sustained increase in the general level of prices over a given period of time, usually one year. Inflation can have negative effects on many of the key economic outcomes such as economic growth, exports, international competitiveness and income inequality. Inflation is measured in Australia by the Consumer Price Index (CPI); the CPI outlines the movement in the prices of a basket of goods and services that are weighted according to their importance for the average Australian household. The annual rate of inflation is measured by the percentage change in the CPI over a period of a year, highlighted in Figure 3.1 . Recent Trends in Inflation Australia’s most significant macroeconomic achievement of recent years is the sustained decline in inflation rates from the early 1990s.
Role of Government in Mixed Economies Such As Australia What role do governments have in modern mixed economies such as Australia? Using appropriate indicators (macro economic aggregates) outline the present state of the economy. In what ways is the Commonwealth government using fiscal and monetary policies to influence the Australian economy? What are the main features of the government's micro economic policy? Why is the government concerned about microeconomic reform?
As the dollar depreciates, more than the rise in price, the real change rate (R) declines and the price level increases. Thus we can conclude that a decline in real exchange rate independently results in a raise in price level. If the RBA wishes to depreciate the Australian dollar, it may do so through expansionist monetary policy. As the money supply increases and Australian interest rates are lowered (graph) relative to their foreign counterparts. T... ... middle of paper ... ...the earthquake to the Japanese market.
Exchange Rates: It is the value of money of a country prevailing in other countries. Due to high inflation, the exchange rate gets fluctuated which in turn affects trades (import and export), transaction across border and also value of money gets affected. 3. Unemployment: If inflation is high, the unemployment rate is low. The growth of a nation is also dependent on the rate of employment.
The financial traders and dealers seek a low inflation, low interest rate, low current account deficit, high growth, budget surpluses and small public sector. If the Government does not achieve these policies, the markets will punish it. If they do achieve them, the markets may still punish them. Any way you look at it, Australia is integrated into the globalised world economy and is dependent on the activities and policies of globalisation. Australia’s future will move with the ebb and flow of globalisation.
Unemployment is caused by a range of short and long-term factors: The level of economic growth:Unemployment is closely related with the overall level of economic growth. It is generally felt that unemployment starts rising when growth is around 3% or lower. On the other hand, when growth is around 4% or higher the level of unemployment falls. Generally a change in the level of economic growth takes a period of around six months to influence the level of unemployment. the slowdown in economic growth between 1995 and 1997 contributed to unemployment drifting upwards in the 9% range, while faster economic growth between1997 and 2000 brought it back down to 7%.
There are a number of causes of unemployment in the economy. Some of these causes are: • Level of economic growth • Stance of macroeconomic policies • Constraints on economic growth • Rising participation rates • Structural change • Technological change • Productivity • Inadequate levels of training and investment • Rapid increase in labour costs, and • Inflexibility in the labour market Works Cited Australian Bureau of Statistics http://www.abs.gov.au/ausstats/abs@.nsf/mf/6202.0 http://www.smh.com.au/opinion/politics/rudd-should-cash-in-on-the-economy-20100327-r3yr.html
The high ROCE can be caused by the high asset turnover. Obviously, the rate of return on capital employed is much higher than the rate at which the company borrows. While there has been a slight decrease (0.44%) from 2014 to 2015 in return on shareholder’s fund. The primary factors of leading this decrease are the declining