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Short-Run Economic Fluctuationsss

Date post: 07-Apr-2018
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    Short-run Economic Fluctuations

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    Todays Topics

    1 The Impact of Recession on Businesses

    Did the Global Financial Crisis Produce a

    Recession in Australia ?

    The Influence of Recession on Unemployment &

    Inflation

    Federal Elections & the State of the Economy

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    Recession & Expansion

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    Real GDP growth and the unemployment rate

    Recession & Expansion

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    The Impact of Recessionon Businesses

    Produce

    durable goods

    Industry

    ProduceNon-durablegoods

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    Calculation ofGDP Growth Rate

    Base year ---- 1975

    GDP Growth rate

    = (real GDP of current year-real GDP ofbase year) / real GDP of base year

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    Did the Global Financial Crisis Producea Recession in Australia ?

    Real GDP Growth Rate, Australia ( part 1)

    Source: Reserve Bank of Australia,http://www.rba.gov.au/statistics/tables/index.html#output_labour

    http://www.rba.gov.au/statistics/tables/index.htmlhttp://www.rba.gov.au/statistics/tables/index.htmlhttp://www.rba.gov.au/statistics/tables/index.htmlhttp://www.rba.gov.au/statistics/tables/index.html
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    Real GDP Growth Rate, Australia ( part 2)

    Source: Reserve Bank of Australia,http://www.rba.gov.au/statistics/tables/index.html#output_labour

    Did the Global Financial Crisis Producea Recession in Australia ?

    http://www.rba.gov.au/statistics/tables/index.htmlhttp://www.rba.gov.au/statistics/tables/index.htmlhttp://www.rba.gov.au/statistics/tables/index.htmlhttp://www.rba.gov.au/statistics/tables/index.html
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    Real GDP Growth Rate, Australia ( part 3)

    Source: Reserve Bank of Australia,http://www.rba.gov.au/statistics/tables/index.html#output_labour

    Did the Global Financial Crisis Producea Recession in Australia ?

    http://www.rba.gov.au/statistics/tables/index.htmlhttp://www.rba.gov.au/statistics/tables/index.htmlhttp://www.rba.gov.au/statistics/tables/index.htmlhttp://www.rba.gov.au/statistics/tables/index.html
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    Real GDP Growth Rate, Australia ( part 4)

    Source: Reserve Bank of Australia,http://www.rba.gov.au/statistics/tables/index.html#output_labour

    Did the Global Financial Crisis Producea Recession in Australia ?

    http://www.rba.gov.au/statistics/tables/index.htmlhttp://www.rba.gov.au/statistics/tables/index.htmlhttp://www.rba.gov.au/statistics/tables/index.htmlhttp://www.rba.gov.au/statistics/tables/index.html
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    The Influence of Recession onUnemployment & Inflation

    the natural rate of unemployment

    the cyclical rate ofunemployment

    inflation rate

    Recession

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    Natural Rate ofUnemployment (NRU)

    Definition:The rate of unemployment that prevails

    when cyclical unemployment is zero.

    or

    Natural rate of unemployment (u*)=frictional + structural

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    Cyclical rate ofunemployment

    Definition:the extra unemployment that occurs

    during periods of recessions.

    Contractionary GapOutput gap Cyclical unemployment

    y-y * < 0 u - u* > 0Negative Positive

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    Inflation

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    Okun's Law

    %Output gap = - x %Cyclical unemploymentThis can also be expressed as:

    (y-y*) / y* = -(u-u*)

    where:

    y is actual output

    y* is potential output ( full-employment output)

    u is actual unemployment

    u*is the natural rate of unemployment

    is a constant, derived from regression show the link between

    deviations from natural output & natural unemployment; for the US, is estimated to be about 2.0, while in Australia, it is about 1.6

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    Federal Elections &the State of the Economy

    Whats yourprediction?

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    www.themegallery.c

    Thank you !


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