• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Economic Growth HSC Notes

Extracts from this document...


Economic growth is the most important single measure of the performance of an economy. It generally involves an increase in the volume of goods and services that an economy produces over a period of time. It is measured by the annual rate of change in the Gross Domestic product (GDP). Aggregate Demand (AD): refers to the total demand for goods and services within the economy. Components include - Consumption (C), Investment (I), Government Spending (G), and Net Exports (X-M) Aggregate Supply (AS): refers to the total productive capacity of an economy i.e. potential output when all factors of production are fully utilised. Effects/Impacts of Economic Growth * Living Standards: o Faster economic growth ? Increase in real GDP/capita. o Real wages rise ? ? increase in household's disposable income. o Increase In household's disposable income means that there is more spent consumption, which means that there is a higher level of material living standards. o Faster economic growth in Australia ? 2.2% p.a growth/capital of real income between 1998 and 2008. * Employment: o A key benefit of economic growth is the strong growth in employment o As there are higher levels of economic growth in a country, there is a general increase in the level of aggregate demand. o To match this higher level of aggregate demand, there is increased output, which usually requires more workers. o In Australia between 1996 and 2007 there was fairly strong levels of economic growth which resulted in the creation of more than 1.5 million jobs o Between 1997 and 2008: * The unemployment rate fell below 4.3% (close to NAIRU) ...read more.


This provided the perfect conditions for a very low inflationary environment. The 1960s and the 1990s were the best performing decades of the century. The 1960s were helped by a boom in mineral trade and an improvement in the productivity of manufacturing and strong population growth. The strong economic growth in the 1990s was a reflection of the sound macropolicy framework and the ongoing structural reforms. The second half of the 1990s was historically high productivity, strong GDP growth/capita, falling unemployment and low inflation. In the first half of the 2000s decade, stronger domestic and world economies, low interest rate and ongoing productivity growth all boosted Australia's GDP growth. However, the growth of the economy has been hindered by supply constraints such as skill shortages, lack of infrastructure capacity to keep up with demand and lower productivity growth. Since the early 1990s, Australia had avoided a major recession until the Global Financial Crisis in Late 2008. In 2009 Australia had an uncertain economic future. The 2009-10 budget forecast that there would be a 0.5% contraction in 2009-10, whereas the RBA forecasted a 0.5% growth. The Australian economy showed to be resilient and experienced a much more gradual slowdown that other OECD's like USA and UK. In 2008-09, the economy recorded a positive 1% growth rate. The RBA later in the year changed their forecast from a contraction of 0.5% to an expansion of 0.5%. Causes/Influences of Economic Growth * Global Economic Conditions: have been favourable since the early 1990s ?lower inflation, lower interest rates, lower unemployment rated and greater macroeconomic stability worldwide. ...read more.


The RBA tried to avoid any causes of economic imbalance. Between 2005 and early 2008, a positive climate for investors and consumers was maintained by controlling the domestic interest rates to ensure that the inflation rate was within the RBA range i.e. 2-3% * Fiscal policy is aimed at debt reduction and consolidation. Since the late 1990s until 2008, the Federal Government had run budget surpluses, which helped to wipe the public debt. In July 2000, taxation reforms were announced which aimed to reduce costs to businesses which would in turn increase economic efficiency in the tax system. Greater investment and a healthy environment for economic growth was achieved by lower personal tax, company tax and capital gains tax. * The workplace legislation of 2006 was designed to improve the efficient of labour markets and the 'welfare to work' reforms provides more incentives for the older people and the unemployed to stay or enter into the workforce (attempt to increase labour force participation) * One way of achieving economic growth is increasing labour productivity. The 2006 National Reform Agenda and the 2008 COAG Word Agenda emphasis vocational training and up skilling the labour force, this improvement of the quality of labour force will ensure greater productivity and efficiency, which would in turn mean greater output. New policies to improve the efficiency of capital stock such as ports and other infrastructure, water and electricity are also in effect. COAG aims to reform seven key areas: * o Productivity o Health and Ageing o Climate Change and Water o Housing o Indigenous o Business Regulation o Vocational training and education ?? ?? ?? ?? ECONOMIC GROWTH Basil Razi 1 ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level UK, European & Global Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level UK, European & Global Economics essays

  1. Marked by a teacher

    Discuss the extent to which the fast economic growth of China and growth of ...

    5 star(s)

    With increasing ties in trade between the UK and China, international relations may improve and the fields that we (the UK) specialise in come into play. For example as great as the Chinese work force is, it lacks in financial knowledge and expertise.

  2. Marked by a teacher

    Analyse and Evaluate the significance of Fiscal Policy rules and Fiscal Policy targets and ...

    4 star(s)

    So peoples disposable income ?. Monetary Policy can promote economic growth and stability because of the Monetary Policy Transmission mechanism; the way in which Monetary Policy affects inflation rates through the impact it has on other macroeconomic variables.

  1. Why has GDP growth been so slow in Somalia?

    rich countries, which then manufactured products out of those commodities and sold them back to the poorer countries. The value added by manufacturing a usable product cost more than the primary products used to create those products. Therefore, poorer countries would never be earning enough from their export earnings to pay for their imports12.

  2. Where does the World Trade Organisation fit in the overall scheme of international public ...

    and flexibility in interpreting WTO rules on patent protection. The EU has forced other WTO members to dilute the commitment to abolish agricultural export subsidies; and extracted new commitments to negotiate on environment and the "Singapore issues" (competition, investment, trade facilitation and transparency in public procurement, all introduced into the WTO work programme at the Singapore Ministerial in 1996).

  1. Comprehensive Anatomy of China

    Even though the Korean and Vietnamese civilizations are considered to be separate entities under their own rule, they have retained what can best be described as an intimate relationship with the Han people. It's important to note that outburst along China's borders, where many of the country's minorities live, are not all that uncommon.

  2. Environmental Economics HSC Notes

    * Economic growth and environmental protection ? give people the best quality of life. * He benefits of satisfying material wants is undermined by damage to the natural environment or depletion of resources. E.g. depleted natural environment ? environment is unpleasant to living and health effects on humans.

  1. Infation HSC Notes

    Labour Market Polices: are microeconomic polices that are aimed at influence in the operation and outcomes in the labour market including industrial relations polices that regulate the process of wage determination as well as training, education and job-placement programs to assist the unemployed.

  2. Notes on the economic transformation of China.

    + other businesses taxes 1. SOEs BEFORE: 1. SOEs dominated eco 2. Monopoly control over particular assets/mkts ? inefficiently run 3. Resources poorly allocated + governance arrangements weak (orgs susceptible to corruption) AFTER: 1. Restructuring + privatisation 2. New legal frameworks + corporate governance practices that improved operation 3.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work