Essay on Australian Economic Issues - 1421 Words

Economic Growth Measurement Economic growth refers to an increase in an economy’s productive capacity, as measured by changes in its real GDP (adjusted for inflation), over a period of time. Growth may be measured quarterly, annually, or year on year (changes from one quarter to the corresponding quarter the following year). Annual growth is used to identify trends in the business cycle, while quarterly growth provides an indication of the economy’s short-term direction, and year on year growth to show annual progress. These measures are necessary so that policy decisions can be implemented accordingly. Fiscal policy may only be implemented once per year in the annual budget while monetary policy may be conducted 12 times per year†¦show more content†¦In the Government’s Budget Speech in May 2009, Treasurer Wayne Swan stated that annual growth was expected to bottom out at a level of -0.5% in 2009-10, followed by economic recovery in the years to come with 2010-11 predicted to record 2.25% annual growth and 4.5% for 2011-12. Justification of Government Policy The reason for the government’ decision of expansionary fiscal policy to stimulate economic growth is evident with an understanding of Keynesian economic theory and the Keynesian Transmission Effect. This is a theory of macroeconomics, developed by John Maynard Keynes , based on the principle of aggregate demand being the major determinant of economic growth. 1) Equilibrium level of National Income: Keynes’ theory suggests that individuals will not necessarily demand what is produced, therefore firms must produce what consumers demand rather than simply expanding production (increasing supply, which previously was assumed to increase aggregate demand). Thus, the level of economic activity, or total output (O) was determined by the total expenditure (E) within an economy. The amount spent by firms, individuals, the government and foreigners is determined by their level of income (Y), which is determined by their level of production (O). Therefore, Keynes proposed that the equilibrium level of income, where there is no tendency to change occurs when: Y = E =Show MoreRelatedAustralian Politics And Its Impact On Social And Economic Issues3343 Words   |  14 PagesAustralian and American politics are both polarised by clashing philosophies between two major parties dominating the system, however, the United States is faced with a greater political dichotomy stunting the growth of legislation on social and economic issues. In Australian politics, these parties are the Australian Labor Party and the Liberal National Party and in the United States the Democratic Party and the Republican Party clash. These parties lie on opposite ends of the traditional politicalRead MoreAustralian Aviation Sector Influences On The Australian Economy And The Tourism Industry1580 Words   |  7 PagesTOUR2010 – Applied Economics for Tourism Economic Issues Report Jessica Thomson S43210338 1.0 Introduction This economic issues report will outline how the Australian aviation sector influences both the Australian economy and the tourism industry. The report will also highlight how the economic issues of employment, fuel consumption and environmental challenges affect the Australian aviation sector and how these issues relate to the economic principles of supply and demand. The report willRead MoreThe Growth Of The Australian Economy1546 Words   |  7 Pagesyears, the Australian economic performance is dominated by economic downturns. Recently, Australia facing two crucial issues in their economy, those are increasing budget deficit and houses affordability. 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This essayRead MoreEssay about Indigenous Health1500 Words   |  6 Pageswell as contemporary socio-economic issues† (Hampton Toombs, 2013, p. 1). The poor health position of Indigenous Australians is a contemporary reflection of their historical treatment as Australia’s traditional owners. This treatment has led to Indigenous Australians experiencing social disadvantages, significantly low socio-economic status, dispossession, poverty and powerlessness as a direct result of the institutionalised racism inherent in contemporary Australian society. Indigenous populationsRead MorePreliminary Economics Skills Shortage Essay1053 Words   |  5 Pagesskills shortage issue in the Australian labour market is very apparent. In any case, the reasons as to why this is occurring always relates to factors of change. These factors of change include; the general economic conditions, conditions in the firms industry, changes in technology, the ageing population, the demand for labour, and the education, skills and experience of workers. The government investigates ways in which they can protect the Australian economy and the Australian workforce. ThisRead MoreGdp Growth And Other Economic Indicators1408 Words   |  6 Pagesgrowth and other economic indicators Average per capita income in the United States has the increasing trend that covers a period of 1990 to 2014. The GDP per Capita reveals relationship in economic performance and population growth of a country. An increase in Gross Domestic Production per Capital shows development in economic leading to improvement in living standards. On the other hand, Australia GDP has shown a positive increase over last decade (Babihuga, 2007). 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