Economic growth

Question 1

1991-2008 (eco growth)

Answer 1

3.6% - sustained economic growth due to trade liberalisation and the first mining boom in the 2000s

Question 2

2008-2009 (GFC) (eco growth)

Answer 2

-went to 0.9% - due to recession in the international business cycle, however Australia remained resilient due to successful expansionary macroeconomic policy

Question 3

2009-2010 (eco growth)

Answer 3

2.3% - upswing in eco growth, however onset of the european sovereign debt crisis resulted in falling global investor confidence

Question 4

2011-2012 (eco growth)

Answer 4

4.3% - two speed economy emerges as the appreciation of the dollar increases cost of exports and reduces IC, whilst investment and demand for commodities remains from the second mining boom

Question 5

2012-2015 (eco growth)

Answer 5

2.3% - falling eco growth due to decreased consumption from post-gfc

Question 6

2017-2018 (eco growth)

Answer 6

3.1% - higher government expenditure, shutdown of the PMV industry

Question 7

2020 (eco growth)

Answer 7

-0.3% - impacts of pandemic on consumer confidence, disruptions in supply chains globally, higher unemployment due to business closures

Question 8

Benefits of economic growth (4)

Answer 8

1. Improvements in eco dev
2. reduction in cyclical ue
3. increased government tax revenue
4. higher levels of investment

Question 9

Costs of economic growth (4)

Answer 9

1. Higher rates of inflation
2. increased income inequality
3. deterioration of environmental quality
4. worsening of the CAD

Question 10

Effect of fiscal policy on eco growth

Answer 10

involves use of the budget (G & T) to act as an injection into the economy to increase components of AD, also effected by the simple multiplier

Question 11

Effects of monetary policy on eco growth

Answer 11

involves RBA influencing interest rates to encourage consumers and businesses to borrow and spend, it is more indirect than fiscal policy

Question 12

effect of microeconomic reform on eco growth

Answer 12

aims to increase output and productivity, such as through investment into training programs and education to increase GDP (AS led growth)

Question 13

Examples of micro policy to promote eco growth

Answer 13

• Greater investment into education and training programs in order to overcome the skills shortage in Australia
• trade liberalisation policy that increase international competitiveness through cheaper prices of imports