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Units that are treated as if they were one unit

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units that are treated as if they were one unit Microeconomics is concerned with specific economic units and a detailed consideration of the behaviour of these individuals units
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Week 1 Lectures 1 & 2 Measuring Macroeconomic Performance: Output and Prices Reference: Bernanke, Olekalns and Frank - Chapter 3 Key Issues Indicators of macroeconomic performance Measuring output (GDP) Measuring prices and inflation
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2 Criteria for Evaluating Macroeconomic Performance 1. Rising Living Standards – economic growth Tendency for the level of output (i.e. quantity and quality of goods and services) to increase over time.
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3 Real Quarterly GDP per-capita – Australia (1973-2010) 0 2000 4000 6000 8000 10000 12000 14000 16000 Sep-73 Sep-75 Sep-77 Sep-79 Sep-81 Sep-83 Sep-85 Sep-87 Sep-89 Sep-91 Sep-93 Sep-95 Sep-97 Sep-99 Sep-01 Sep-03 Sep-05 Sep-07 Sep-09 $ per quarter
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4 2. Stable Business Cycle – low volatility in fluctuations of actual output around its trend or potential output. Australia’s Real Quarterly GDP Growth Rates – Decade Averages 1960s 1970s 1980s 1990s 2000s Mean 1.26 0.78 0.82 0.83 0.75 Standard Deviation 1.50 1.49 0.97 0.77 0.52 Ratio 0.84 0.53 0.85 1.08 1.44 Mid-1980s Great Moderation – large fall in volatility of real output – why?
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5 3. Relatively Stable Price Level – low (positive) rate of inflation
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6 Australian Inflation - Consumer Price Index Measure -2.0 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0 20.0 Sep-70 Sep-72 Sep-74 Sep-76 Sep-78 Sep-80 Sep-82 Sep-84 Sep-86 Sep-88 Sep-90 Sep-92 Sep-94 Sep-96 Sep-98 Sep-00 Sep-02 Sep-04 Sep-06 Sep-08 year-ended % change
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7 4. Sustainable Levels of Public and National Debt Public debt – borrowing by public sector from private sector Influenced by government budget deficits/surpluses National debt – borrowing by domestic residents from foreign countries Influenced by an economy’s current account deficits/surpluses
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8 Budget Balance and Net Government Debt for Australia -6 -4 -2 0 2 4 6 8 2000- 01 2001- 02 2002- 03 2003- 04 2004- 05 2005- 06 2006- 07 2007- 08 2008- 09 2009- 10 2010- 11 2011- 12 2012- 13 2013- 14 % of GDP Budget Balance Debt
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9 Australia’s Net External Liabilities 0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 Jun-88 Jun-90 Jun-92 Jun-94 Jun-96 Jun-98 Jun-00 Jun-02 Jun-04 Jun-06 Jun-08 Per cent Net Debt/GDP Net Equity/GDP Net External Liabilities/GDP
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10 5. Balance between Current and Future Consumption How much should an economy save/invest?
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11 Australian Private Investment and National Saving 0.00 5.00 10.00 15.00 20.00 25.00 30.00 Sep-76 Sep-78 Sep-80 Sep-82 Sep-84 Sep-86 Sep-88 Sep-90 Sep-92 Sep-94 Sep-96 Sep-98 Sep-00 Sep-02 Sep-04 Sep-06 Sep-08 % of GDP National Saving/GDP Private Investment/GDP
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12 6. Full Employment Provision of employment for all individuals seeking work
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13 Australian Unemployment Rate – Monthly 0.0 2.0 4.0 6.0 8.0 10.0 12.0 Feb-78 Feb-80 Feb-82 Feb-84 Feb-86 Feb-88 Feb-90 Feb-92 Feb-94 Feb-96 Feb-98 Feb-00 Feb-02 Feb-04 Feb-06 Feb-08 Feb-10 percent
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14 Measuring National or Aggregate Output
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