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EVALUATION OF THE EFFECT OF MACROECONOMIC VARIABLES ON THE AUSTRALIAN ECONOMY
The Australian economy is regarded as one of the strongest and most powerful economy in the world. It is greatly developed and holds a very strong position in global market[Macrotrends]. Its GDP was estimated at A$1.89 trillion as of 2019. Australia's total wealth was AUD$10.9 trillion as of September 2019. In 2017, Australia was the 13th-largest national economy in terms of nominal GDP, 20th-largest by purchasing power parity  and 25th-largest goods exporter and 20th-largest goods importer. The Australian economy is dominated by its service sector comprising 62.7% of the GDP and employing 78.8% of the labour force in 2017.
In this report, the evaluation of the macroeconomic variables; Real GDP growth rate, unemployment rate, inflation rate, interest rate, exchange rates and net exports growth rates.
The study of macroeconomics leads us to conclude the economy’s or nation’s performance as a whole. The market value of all final goods and services produced within a country in a given period of time is defined as the Gross Domestic Product(GDP). Further more, GDP can be divided in two parts:
1.Real GDP
2.Nominal GDP
Real GDP is defined as the production of goods and services valued at constant prices and Nominal GDP is defined as the production of goods and services valued at cu
ent prices. Data of Australia’s macroeconomic variables are listed followed by supportive analysis[N.G.Mankiw, Principles Of Economics].
The Annual percentage growth rate of GDP at market prices is totally based on constant Australian prices and the Aggregates are based on constant 2010 U.S. dollars.[ www.abs.gov.au ] Real GDP is the sum of gross value added by all domestic producers of the country adding any product taxes and subtracting any subsidies not included in the value of the products. It is calculated without making deductions for depreciation of fa
icated assets or for depletion and degradation of natural resources.
The inflation rate is measured as the consumer price index CPI, reflecting the annual percentage change to the cost of the average consumer acquiring any basket of goods and services that are fixed or changed at specified price or quantity intervals, such as yearly.
The growth rate and the unemployment rate is related to each other and can be explained with the help of Okun’s law which states the statistical relationship between a country’s unemployment rate and the real GDP growth rate. [N.G.Mankiw] Okun’s law tells us how much of a country’s GDP may be lost when the unemployment rate is above its natural rate. Output depends on the amount of labor used in the production process, so there is a positive relationship between output and employment. Total employment equals the labor force minus the unemployed, so there is a negative relationship between output and unemployment. On the other hand, high unemployment indicates the economy is operating below full capacity and is inefficient; this will lead to lower output and incomes.
The relationship between unemployment and the inflation rate can be explained with the help of the Phillips curve. The curve provides us the relation of inflation rate with the rate of unemployment. The Phillips curve argues that unemployment and inflation are inversely related, as levels of unemployment decrease, inflation increases.
ANNUAL REAL GDP GROWTH RATE AND INFLATION RATE OF AUSTRALIA FROM 1990-2018
    
    YEAR
    REAL GDP(ANNUALLY)
    GROWTH RATE(%)
    INFLATION RATE
    ANNUAL...