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THE GLOBAL ECONOMY

Question No. 1: Part (i)

AUSTRALIA
Yea RGD Inflation Unemployment
r P Rate Rate
201 2.07
0 % 2.92% 5.21%
201 2.46
1 % 3.30% 5.08%
201 3.92
2 % 1.76% 5.23%
201 2.58
3 % 2.45% 5.66%
201 2.53
4 % 2.49% 6.06%
201 2.19
5 % 1.51% 6.05%
201 2.77
6 % 1.28% 5.70%
201 2.37
7 % 1.95% 5.58%
201 2.94
8 % 1.91% 5.29%
201 1.90
9 % 1.61% 5.18%

Source: Macrotrends statistics

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 Chart Title
10.00%
9.00%
8.00%
7.00%
6.00%
5.00%
4.00%
3.00%
2.00%
1.00%
0.00%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

RGDP Inflation Unemployment

UK
Yea RGD Inflation Unemployment
r P Rate Rate
201 1.95
0 % 2.49% 7.90%
201 1.54
1 % 3.86% 8.10%
201 1.48
2 % 2.57% 8.00%
201 2.14
3 % 2.29% 7.60%
201 2.61
4 % 1.45% 6.20%
201 2.36
5 % 0.37% 5.40%
201 1.92
6 % 1.01% 4.90%
201 1.89
7 % 2.56% 4.40%
201 1.34
8 % 2.29% 4.10%
201 1.41
9 % 1.74% 3.80%

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Source: Macrotrends statistics

Chart Title
9.00%

8.00%

7.00%

6.00%

5.00%

4.00%

3.00%

2.00%

1.00%

0.00%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

RGDP Inflation Unemployment

SPAIN
RGD Inflation Unemployment
Year P Rate Rate
201 0.16
0 % 1.80% 19.86%
-
201 0.81
1 % 3.20% 21.39%
-
201 2.96
2 % 2.45% 24.79%
-
201 1.44
3 % 1.41% 26.09%

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 201 1.38
4 % -0.15% 24.44%
201 3.84
5 % -0.50% 22.06%
201 3.03
6 % -0.20% 19.64%
201 2.89
7 % 1.96% 17.22%
201 2.35
8 % 1.68% 15.26%
201 1.98
9 % 0.70% 13.96%

Source: Macrotrends statistics

Chart Title
30.00%

25.00%

20.00%

15.00%

10.00%

5.00%

0.00%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

-5.00%

RGDP Inflation Rate Unemployment Rate

Question # 1: Part (ii) Macroeconomic Performance

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Macroeconomic execution alludes to an evaluation of how well a nation is getting along in arriving at key
targets of government strategy. The fundamental point of strategy is typically an improvement in the
genuine way of life for their populace.

Macroeconomic performance of Australia:

Australia observe the highest RGDP in 2012 that is 3.92% and this create impact on the inflation to stay
at lower end with 1.76% and unemployment rate also stay in control with the normal rate of 5.23%.

Australia monitor the lowest RGDP in latest year of 2019 that is 1.90% but inflation behave inversely and
inflation came to the lowest percentage of the decade that is 1.61% and unemployment rate was also
not so high and stay at 5.18%.

This give impression that economy factors are not so stable and it can behave weirdly as well.

Macroeconomic performance of United Kingdom:

RGDP was low in early years of 2010 and stay between 1 to 2 percent and in mid years it raises above
2%. In later years it also reduce to below 2% and even below to 1.5%. This creates direct impact over the
unemployment rate of the country and unemployment rate increases with the increase in RGDP and
decreases with the decreasing rate of RGDP.

Inflation rate behavior didn’t depends upon the RGDP or Unemployment rate and it behaves unevenly
across the decade.

Macroeconomic performance of Spain:

Spain observe the lowest in fact negative RGDP in early years of 2010 and stay in increasing trend in mid
years and again came below 2% in 2019. This creates direct impact over the unemployment rate of the
country and unemployment rate increases with the increase in RGDP and decreases with the decreasing
rate of RGDP. Inflation behave inversely to the RGDP as RGDP decrease inflation increase and RGDP
increase inflation decrease (Mankiw, N. Gregory author. Macroeconomics, 2016.).

Analysis:

Australia and UK never came to negative RGDP and Spain RGDP stay negative for 3 years. The inflation
rate of Australia and Spain behave exactly opposite to the RGDP rate but UK’s inflation behave
randomly. Australia and UK observe some good rates of RGDP growth in initial year of decade but Spain
was negative in starting years of decade.

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Question # 2 (a)

Macroeconomic execution alludes to an evaluation of how well a nation is getting along in arriving at key
goals of government strategy. The principle point of strategy is typically an improvement in thThe total
interest/total flexibly, or AD/AS, model is one of the basic devices in financial aspects since it gives a
general structure to uniting monetary variables in a single outline.

We can look at since quite a while ago run monetary development utilizing the AD/AS model, yet the
variables that decide the speed of this drawn out financial development rate don't show up legitimately
in the AD/AS outline.

Recurrent joblessness is moderately huge in the AD/AS system when the harmony is considerably
underneath likely GDP and generally little when the balance is close to possible GDP.

Weights for expansion to rise or fall are appeared in the AD/AS structure when the development starting
with one balance then onto the next causes the value level to rise or to fall genuine way of life for their
populace. (Mankiw, N. Gregory author. (2016))

(b)

Globalization has been a characterizing highlight of the advanced world.

Discussion exists regarding whether the COVID-19 pandemic will fortify or debilitate it.

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Richard Haass contends that legislatures and organizations ought to be wary, when examining a system
of noninterference, and that deglobalization could demonstrate itself to be a grave misstep.

Globalization has been driven by current innovation, from fly planes and satellites to the Internet, just as
by arrangements that opened up business sectors to exchange and venture. Both strength and
precariousness have advanced it, the previous by empowering business and the travel industry, and the
last by powering streams of transients and displaced people. Generally, governments saw globalization
as a net advantage and were commonly substance to let it run its course.

Yet, globalization, as is obvious from its different structures, can be damaging just as valuable, and as of
late, a developing number of governments and individuals around the globe have come to see it as a net
danger. With regards to environmental change, pandemics, and psychological oppression – all
exacerbated by globalization – it isn't difficult to perceive any reason why. In any case, in different zones,
the expanded restriction to globalization is more convoluted.

There is a superior method to react to the difficulties and dangers of globalization. Successful aggregate
activity can meet the dangers of malady, environmental change, digital assaults, atomic expansion, and
fear based oppression. No single nation all alone can make itself secure; unilateralism is certainly not a
genuine strategy way (Mankiw, N. Gregory, 2016.).

Question # 3 (i) a

At its August 2020 gathering, the Reserve Bank of Australia declared the money rate target would be
held at 0.25%.

The record low money rate target setting, which has been portrayed by the RBA as the 'powerful lower
bound', stays a key element of the fiscal strategy conveyed in light of COVID-19

A significant job of the Reserve Bank is leading fiscal arrangement to accomplish the destinations of the
Reserve Bank Board. It is the obligation of the Board to set loan fees such that best add to the

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soundness of the money (which means value strength), full business, and the monetary thriving and
government assistance of the individuals of Australia.

All things considered, after some time. The Reserve Bank sets the money rate to impact monetary
movement and swelling to accomplish this objective.

(ii)

The essential medium-term goal of fiscal arrangement is to control swelling, so an expansion target is
along these lines the highlight of the financial strategy structure. Overall, over time.[1] This is a pace of
swelling adequately low that it doesn't really twist monetary choices in the network. By and large, gives
order to financial strategy dynamic, and fills in as a stay for private area swelling desires

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References

Alogoskoufis, G. (1992), ‘Monetary accommodation, exchange rate regimes and inflation persistence’,
Economic Journal, 102, 461-480.

Ball, L. (1992), ‘Why Does High Inflation Raise Inflation Uncertainty?’ Journal of Monetary Economics 29,
371-388.

Bera, A and Jarque, C. (1980), ‘Efficient tests for normality, heteroscedasticity and serial independence
of regressions’, Economic Letters, 6, 255-259.

Black, F., (1976), ‘Studies of stock market volatility changes’, Proceedings of the American Statistical
Association Business and Economic Studies Section, 177-181.

Berument, H and Dincer, N. N. (2005), ‘Inflation and Inflation uncertainty in the G-7 countries’, Physica
A, 34, pp 371-379.

Bhar, R. and Hamori, S. (2004), ‘The link between inflation and inflation uncertainty: Evidence from G7
countries’, Empirical Economics, 29, 825-853.

Conrad, C and Karanasos, M. (2005), ‘On the inflation-uncertainty hypothesis in the USA, Japan and the
UK: a dual long memory approach’, Japan and the World Economy, 17, 327-343.

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