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Final project of macro economics

Macroeconomics indicators
Submitted to
Miss Mamona Sadaf
Submitted by
Amina
Asad Bukhari
Razi Nadeem
Program BBA
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Acknowledgment

I would like to express our deepest appreciation to all those who

provided us the possibility to complete this report. A special gratitude
we give to our instructor, Ms Mamona sadaf, whose contribution in
stimulating suggestions and encouragement, helped us to coordinate
our project especially in writing this report.
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Contents
Australia..........................................................................................................................................4
Neighbouring countries...................................................................................................................4
Indicators of macro economics........................................................................................................5
Unemployment rate.........................................................................................................................5
Reason of rise and fall in unemployment graph........................................................................6
Inflation rate....................................................................................................................................7
Why graph rise and fall...............................................................................................................7
Economic growth.............................................................................................................................8
Why graph rise and fall...............................................................................................................8
Interest rate%..................................................................................................................................9
Why graph rise and fall...............................................................................................................9
Exports...........................................................................................................................................10
Why graph rise and fall.............................................................................................................10
Gross national product GNP........................................................................................................10
4 major economic issues in Australia.............................................................................................11
Unemployment...............................................................................................................................11
The economy is general and interest rates...................................................................................11
Housing affordability....................................................................................................................12
Poverty............................................................................................................................................12
Policies...........................................................................................................................................13
Unemployment...............................................................................................................................13
Inflation..........................................................................................................................................13
Current fiscal policy......................................................................................................................13
Current monetary policy...............................................................................................................14
Major events..................................................................................................................................14
OPEC embargo..............................................................................................................................14
Early 80’s recession.......................................................................................................................14
Black Monday 1987.......................................................................................................................14
Global financial crisis....................................................................................................................14
References.....................................................................................................................................15
Evaluation rubric of project............................................................................................................16
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Australia
Australia ranks as one of the best countries to live in the world by international
comparisons of wealth, education, health and quality of life. The sixth largest
country by land mass, its population is comparatively small with most people
living around the eastern and south eastern coastlines. The country’s first
inhabitants, the aboriginal people, are believed to have migrated from Asia tens
of thousands of years before the arrival of British settlers in 1788. They now
make up less than 3% of Australia’s 23 million people.

Neighbouring countries
 Micronesia
 Fiji
 Kiribati
 Marshall Islands
 Nauru
 New Zealand
 Palau
 Papua New Guinea
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 Samoa
 Solomon Islands
 Tonga
 Tuvalu
 Vanuatu

Indicators of macro economics

 Unemployment rate
 Inflation rate
 Economic growth
 GNP
 Exports
 Interest rate

Unemployment rate
The state of being willing and able to work but without a job.
There are four type of unemployment;
 Frictional unemployment
 Seasonal unemployment
 Structure unemployment
 Cyclical unemployment
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1980 to 2014

Reason of rise and fall in unemployment graph

Between 1966 and 2000, both the number of people who were unemployed and Australia's
unemployment rate have increased. Over this period, the number of unemployed people in
Australia increased from 90,300 to 596,000. In the late 1960s and early 1970s, the
unemployment rate stood at 2% but over the 1970s rose gradually to 6%. The early 1980s
saw a sharp rise in the unemployment rate to 10% in 1983. This declined to 6% by 1989. A
further steep rise then occurred in the early 1990s, peaking at 11% in 1993. In 1983 recession
came in Australia and second oil prices occurs which increase unemployment rate.
The day in 1987 whilst America stock marketplace crashed 23 in line with cent. The
Australian marketplace fared even worse tomorrow, with the all ordinaries losing one quarter
of its price. Among the toughest hit was Australia’s richest guy, Robert Holmes a court. His
bell group shares fell $3.70, wiping $440 million off his non- public fortune in a single day.
In 1988 and 1989 economic rationalism decrease unemployment rate.
In1996, government made good relationship with industrial sector which unemployment rate
of Australia was decrease.
The simulations are conducted underneath the idea that the games have a neutral impact in
the long run at the price range of the government of new south wales (the Australian state
website hosting the 2000 Olympics creation in part by using crowding out other capital
works, and in part from short time period debt that is paid off, by the given up of the event
year, with games sales and with additional tax sales flowing from the boost the Olympics has
at the state’s tax base. The labour marketplace is thought to be slack inside the event year.
In 2007, the national productivity commission introduced in Australia which unemployment
rate decreased.
In 2009, unemployment rate increase 5.575 by global financial crisis.
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Inflation rate
Inflation is a quantitative measure of the fee at which the average charge level of a basket of
selected items and offerings in an economy will increase over some period of time. It is the
rise in the trendy degree of prices in which a unit of foreign money efficiently buys much less
than it did in earlier periods. Often expressed as a percent, inflation consequently suggests a
decrease within the purchasing energy of a kingdom’s forex.

1970 to 2010

Why graph rise and fall

1971 – 1975, when there was an unambiguous deterioration in Australia’s inflation. From
1970 to 1975, inflation increased dramatically (from 3.5% to 15.3%). During this period,
Australia suffered both demand and supply shocks. A surge in wages and government
expenditure pushed up demand. In 1973, the first ‘’ oil shock’’ hit with the OPEC boycott
and accompanying dramatic rise in the price of oil. This ‘’ supply shock’’ led to an
international recession and a drop in demand for Australia’s exports. Both the use of
monetary expansion to fund increased common wealth expenditure and the surge in demand
fostered inflation.
In 1978, reserve bank of Australia increases interest rate which inflation rate decreased.
In 1982, inflation increased by second oil shock.
In 1987, inflation increased by global stock market crisis.
In 1991, inflation decreased by economic rationalism.
In 1998, inflation decreased by government made good relationship with industrial sector.
In 2008, Australian government increases taxes so automatically inflation increased.
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Economic growth
1980 to 2010

Why graph rise and fall

In 1983, GDP rate decreased by second oil shock.
In 1987, GDP rate decreased by stock market crisis its hurt very much of Australian
economy.
In 1990, recession came, stock market crash affected long term. It decreases economic
growth.
In 1992, tax cut decreases in taxes occurs that increases economic growth.
In 1998, consumption increases and investment on business increase that increase economy
growth.
In 2000, east time more crisis occur that decrease economic growth.
In 2001, productivity and employment growth occur that increases economic growth.
In 2009, global financial crisis decreased economic growth.
In 2010, flood and cyclones decrease economic growth.
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Interest rate%
The interest rate is the quantity a lender fees for the usage of belongings expressed as a
percent of the essential. The interest rate is generally noted on an annual basis called the
annual percent fee (APR). The property borrowed should encompass cash, purchaser goods,
or massive belongings which include a car or constructing.

1970 to 2010

Why graph rise and fall

In 1973, oil crisis occurs due to which Australian govt. set monetary policy to increase
investment by decreasing interest rate.
In 1986, inflation rate increase, people save more invest less, this increase interest rate.
1989, unemployment rate decreases due to which interest rate decreases.
In 2002, tax cut policy decrease interest internet rate.
In 2008, taxes increase, increase interest rate.
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Exports
Exports are items and services which can be produced in a single us of a and bought to buyers
in another. Exports, together with imports, make up international alternate

1980 to 2013

Why graph rise and fall

In 2000, increase in tax increase in manufacturing prices that increase the value of exports.
In 2008, export of coal increase that increases the export value.
In 2009, global financial crisis decreases exports.
In 2011, relationship with china and high export of Ore causes increase in exports.

Gross national product GNP

Gross countrywide product (GNP) is an estimate of general value of all of the very last
services and products became out in a given period via the approach of production owned by
using a country’s residents. GNP is usually calculated by means of taking the sum of personal
intake prices, private home investment, government expenditure, net exports and any income
earned through residents from remote places investments, minus earnings earned inside the
domestic economy through foreign citizens. Net exports represent the difference between
what a country exports minus any imports of goods and offerings.
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1990 to 2016

GNP
1200

1000

800

600

400

200

0
1985 1990 1995 2000 2005 2010 2015 2020

4 major economic issues in Australia

 Unemployment
 The economy in general and interest rates
 Housing affordability
 Poverty

Unemployment
Unemployment mentioned by 9% of respondents: unemployment verbatim comments ranged
from the simple lack of jobs and jobs available, the lack of employment opportunities
available for younger people, to the problems with immigration impacting on availability of
jobs and the threat posed by robots to manufacturing jobs.

The economy is general and interest rates

The economy is general and interest rates mentioned by 8% of respondents: verbatim
comments about this theme were centred around concerns about the Australian economy with
the high debt and deficit a recurring theme, general economic problems, the lack of industries
in Australia and the way the Australian economy depends on global economic conditions.
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Housing affordability
Which was mentioned by 6% of respondents: housing affordability verbatim comments
refereed to the soaring house price and the growing gap between ‘’ haves’’ and ‘have not’ as
well as the overseas buyers pushing up prices in the housing market.

Poverty
In 2017 across released a new report revealing that poverty is growing in Australia, with an
estimate 2.9 million people or 13.3% of all people living below the internationally accepted
poverty line it also estimated that there are 731000 children in poverty and 17.5% of children
under the age of 15 are in poverty.
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Policies
Unemployment
 Unemployment refers to the number of people who are current jobless yet actively
seeking work. Unemployment usually results from cutbacks in production. Basically,
if organizations are producing less, fewer people will be needed to be employed.
Therefore, the Australian government’s macroeconomics policy focuses on ensuring
low unemployment rates. Consequently, if economic growth increased,
unemployment rates would decrease due to the demand for more labour.

 In august 2010, the unemployment rate in Australia was reported at 5.10%. in

February 2008, Australia recorded its lowest unemployment rate at 4%.

Inflation
 Inflation refers to a general increase in price levels within the economy. If aggregate
demand (the total spending on goods and services made in the economy) rises, prices
also rise. This is due to the fact that if demand is high, firms can still sell as much, if
not more, even at higher prices. This result in greater profits being made, essentially,
when price increase, inflation result.
 There are a number of measures of underlying inflation that are at the reserve bank of
Australia RBA. These measures are valuable in assessing current inflation pressures
in the economy as well as the outlook for future movements in the consumer price
index. Monetary policy is concerned with keeping the inflation rate low, with its
target range typically 2 -3%. Currently, the reserve bank of Australia inflation policy
is working exceptionally well, with a rate of 2.6% which is well within its target
range. However, the central forecast for underlying inflation is around 2.75% over the
next year, with it gradually rising to 3% by 2012 reflecting capacity pressures in parts
of the economy. CPI inflation is set to be over 3% due to increase in the price of
utilities.

Current fiscal policy

 The government is focused on boosting the economy and helping households. This
budget is based on the principles of fairness, security and opportunity. It builds on the
strength of the 2016- 2017 budget and seeks to create more opportunities for
Australians and businesses, or guarantee essential services and create more and better
paying jobs.

 The government is guaranteeing Medicare to ensure Australians can access timely and
affordable health care, by establishing the Medicare guarantee fund.

 Building on the $1.2 billion provided in the 2016 – 2017 budget, the government will
provide an additional $18.6 billion in funding over a decade for schools.

 The government is reducing the cost of living.

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 Together these measures will increase the economy’s performance that is vital to
ensuring that we live within our means and we are able to return the budget to balance
in 2020 – 21.

Current monetary policy

 The latest monetary decision reflected diverting trends in the Australians economy.
The central bank considers it necessary to maintain lax monetary conditions to sustain
inflation and support the domestic economy and disappointing data from the labour
market.

 On other hand, the bank is reluctant to lower rates from its current all-time low.
Lowering rates could encourage households to grow more debt hinder the RBA’s
effort to cool down a skyrocketing housing market.

Major events
OPEC embargo
Oil crisis in 1973 which increased unemployment rate and inflation.
Early 80’s recession
Here unemployment rate was at peak and prices rises.
Black Monday 1987
Biggest stock market crash. The 508-point drop in the DOW JONES industrial
average on October 19 was, and remains, the biggest one-day percentage loss in
the DOW’S history.
Global financial crisis
In 2009 global financial crisis occurs that affected Australian economy.
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References

www.TheGlobalEconomy.com
Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102
Macfarlane, I. J. (1998). "Australian Monetary Policy in the Last Quarter of the Twentieth Century
Parham, Dean. (2002). "Microeconomic reforms and the revival in Australia’s growth in productivity
and living standards"
Reserve Bank of Australia Bulletin, October 1998
Wikipedia
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Evaluation rubric of project

Criteria poor fair good Very excellent

good

Requirement

Demonstrated
knowledge

Explanation

Presentation