• 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)

    Chinese households earning less that US$6000 per year for example will spend almost 100% of their income on basic necessities. It is only after the average household income crosses the US$6000 threshold income that their marginal expenditure quickly shift from basic necessities to discretionary items of high quality, a luxury which most Chinese producers do not qualify.

  2. Marked by a teacher

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

    4 star(s)

    So the Central bank will have to set today the interest rate to affect the rate of inflation it expects in two years time!

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

    This implicit standards harmonisation agenda, aimed at raising developing country standards to developed country levels, is now the most insidious force in the WTO. The door was opened with the TRIPS agreement in the Uruguay Round; the environmental aspects of the Doha Round threaten to open the door much wider.

  2. Unemployment HSC Notes

    loss of skill if unemployed for a long time o Persistent high U/E ? unemployed persons will lose their labour market skills, self esteem and experience ? less employable or even unemployable o Cyclical and short term unemployment ? turns into long term structural unemployment.

  1. Will trading fairly reduce world poverty?

    One article that got to my attention is an article on the 'Sainsbury's' website. It is about Sainsbury's changing their bananas to Fairtrade and how it is benefitting farmers. 'Fairtrade makes a lot of difference, I get $7 more on a box of bananas and I have personally gained funding to fix up my shed.

  2. Was late Victorian Imperialism purely economic in character?

    It gives rise to Eldridge's 'imperialism of fear' Eldridge who saw this new imperialism as the 'imperialism of fear' develops this idea further. He saw Britain as ever more fearful of being eclipsed Navally, and economically, and became increasingly defensive less willing to take chances, more suspicious of foreign powers,

  1. Infation HSC Notes

    Recent Trends in Inflation The most significant microeconomic achievement in the Australian economy of recent times is the sustained inflation rate. After two decades of high inflation levels, the Australian economy lowered its inflation rate and kept it down, and was able to sustain the lowest rate since the 1960s.

  2. Free essay

    does uk housing market warrant government intervention

    pay as much for properties in the north because they would rather live in the south. Therefore if there is a rise in price then demand will be likely to decrease more than it would in the South East What is proposed by the demand curves is that price can

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