Economics Is All About The Allocation, Unemployment, Economic Growth And The Value Of The Dollar

Australia’s economy is much better then South Korea’s. This essay will be comparing five different areas of the economy. These include economic growth and the quality of life, employment and unemployment, distribution of income, environmental sustainability and the role the government in health care, education and social welfare. Income is a necessity to achieve higher living standards. Australia’s average household income is 31 197 USD per year, South Korea’s average household income is only 18 035 USD per year.

Australia’s economic status can be assessed using a range of economic indicators such as unemployment rates, Gross Domestic Product (GDP), inflation rates and interest rates. The economy can affect Australian business’s greatly causing them to flow through the business cycle. The business cycle purpose is to describe the overall trends of the economy and can show growths of high or negative. The four stages in a business cycle are: expansion, this is when the economy has high demands; peak, this is the turning point of the expansions before the economy falls down. A contraction is when the demand for goods and services are low; and trough, is the opposite of a peak. To evaluate Australia’s current economic status factors such as unemployment

In this report you will find current and past trends and target values for these indicators and the current macroeconomic policies of the Federal Government of Australia and the RBA.

Analyse the causes of unemployment, its effects on the Australian economy and how they are addressed through use of macroeconomic policies.

1. Describe two examples of important things that financial planning skills can help you do, and explain why these things are important to you personally. (4-6 sentences. 2.0 points)

1. What is inflation? Inflation is an increase in prices for goods and services (What is Inflation?).

This has been the result of inflationary pressures due to excessive consumer demand, and a world increase in oil prices, the RBA’s primary objective is to contain inflation at 2-3% whilst also achieving sustainable growth. The current increases in interest rates will result in lower aggregate demand as consumers have less disposable income. This results in reductions in inflationary expectations, and a decrease in the demand for imports. Furthermore higher rates of interest will encourage overseas investment into Australia, thus resulting in an increase in the demand for the Australian dollar. An increase in the demand for the AU$, and a decrease in its supply due to less import expenditure will result in an appreciation of the AU$ in forex markets. Overall this results in depressed economic activity and lower levels of growth. However the RBA has been able to increase interest rates in order to contain inflation while maintaining economic growth. This is because the global economy has continued to grow at record pace, with strong growth in the US and China, and the recovery of Japan and Europe. Consequently demand for Australian exports has remained high, thus creating opportunities for increased production and subsequent economic

| |Inflation: The increase in price for something as the demand grows and the product becomes less available due to the demand. If you have a new product that hits the market and is an |

According to the Federal Reserve Bank of San Francisco (2002), inflation can be defined as the increase in the level of prices and a decrease in the purchasing power of money. In short, money loses its value due to the increase of the prices of goods and services. Products that can experience this are food, clothing, electronics, raw materials, and more. The reasons for these occurrences are complex since there are two types of inflation, and each has its respective causes.

Suggesting any economic or policy reforms to the Australian Economy requires us to understand the evolution of an economy and the factors effecting it both intrinsically and globally.

In the first place, inflation can be defined as a persistent increase in the overall level of prices charged for goods and services. It is constantly changing but it is only measured

Inflation is the sustained increase in the general level of prices for goods and services in a county, and is measured as an annual percentage change. (Investopedia) During periods of inflation, the prices of products and services will rise. There are several reasons why an economy would see a rise in inflation. Decrease in supplies, corporate deciding to charge more, and consumer confidence are some of the reasons why an economy would see the inflation rate increase. Consumer confidence is when consumers gain more confidence in spending due to a low unemployment rate and wages being stable. Decrease in supplies is when consumers are willing to pay more for a product or service is that is slowly becoming unavailable due to a decrease in supplies. Corporate decisions are when the corporations basically decide

Booms, busts, recessions, and growth; all of the preceding terms are characteristics of a typical market economy. There are times when an economy can flourish spectacularly and there are times when it can fail miserably. Consequently, it is the responsibility of a nation’s central bank to manage these fluctuations through conducting effective monetary policy. The following paper will assume the perspective of the Reserve Bank of Australia (RBA) and critically analyze the past, present, and future of the Australian economy while considering specific sectors.

Australian Bureau of Statistics (ABS) (2017b), “Consumer Price Index: Concepts, Sources and Methods. Information Paper 6401.0”, Canberra: ABS

In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time. When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a loss of real value in the internal medium of exchange and unit of account in the economy A chief measure of price inflation is the inflation rate, the annualized percentage change in a general price index (normally the Consumer Price Index) over time.