Hypothetical National Income Statistics for a country.
|
Percentage Change unless indicated otherwise
|
2010
|
2012
|
|
|
Actual
|
Forecast
|
|
Household consumption
|
1.1
|
4.2
|
|
Export of goods and service
|
1.7
|
5.5
|
|
Imports of goods and services
|
1.5
|
11.7
|
|
Real Gross Domestic Product
|
-0.3
|
3.75
|
|
External Accounts
Value of local currency relative to $US (Average Value)
Current account balance (% of GDP)
|
0.72
1.3
|
1.30
-1.9
|
|
Labour Market
Unemployment Rate
|
8.4
|
2.6
|
|
Prices
Consumer price index
|
-2.5
|
4.7
|
a) For this hypothetical economy, what were the three major issues of concern in 2009?
b) What is the relationship between these three variables, that is, how does one affect the other?
c) What has happened to the exchange rate between 2009 and 2013?
d) Which of the above variables is the movement in the exchange rate most likely to affect?
e) Explain the relationship between inflation and unemployment over the period 2009 and 2013.
f) In 2013 are there any concerns about external balance? Explain.
g) How is the unemployment rate related to real GDP growth?
h) Given these projections for 2013, what would be the appropriate macroeconomic policy for the Australian government and the RBA?