Recession Affecting Australia's Economy

Q.1

Recession is a macro economic variable, which refers to the downfall of economy of nation. It causes fall of Gross Domestic Product (GDP), fall of demand, low income level followed by unemployment and so on. If we talk about the economy of Australia, it is likely to go in recession in near future. GDP is taken as the crucial factor for determining the national economy. As per 2012 survey, the GDP of Australia was 1534.42 USD (in billion), but now it has decreased to 1453.77 USD (in billion). Mean while, between 2008 to 2009, unemployment in Australia has grown by 1.6%, mining investments and others has also fallen. In these ways, the macro economic factors of Australia is diminishing day by day, which has lead the national economy in

Wage growth has declined markedly in Australia over the past few years. This may reduce the spare capacity in the labour market and eventually lead to unemployment.

Q.3

Recession has devastating effect on the the employment of the nation.When an economy is facing recession, business transactions decreases, which cause businesses to stop expanding resulting low demand. When demand is not high enough, businesses start to reduce their costs by lowering wages, and ceasing to hire new workers, which increases the unemployment rate. Recession also aids to cease the industries and various organizations due to of low investment leading employees to loose their jobs eventually leading to decrement in income flow in nation.

In addition, recession causes investments and government expenditures to go down because of the low income level and low consumption. It causes industries to collaps, firms to lower the costs of production. Eventually leading to unemployment.

Besides, household savings are the only source of income for the banks. Low income leads to low saving in the banks . Due to of that, banks won 't be able to invest in the firms and industries causing them to lag more behing. Lastly, recession also affects the international trade of the nation. Fall of GDP directly leads to the decline in export wherease due to of low national income, import of goods and services also goes down. In this way, every economic factors of the nation is affected by recession.

Q.5

Business cycle is the fluctuation in the nation 's economy over a period of time.It is defined in terms of boom and recession. During boom, there is expansion in the economy whereas during recession there is contraction. The economy of a nation cannot be rigid all the time.Because of various reasons, it catches peak and trough. There is frequent ups and downs in the economy over the period of time.Recovery or we can say healthy economy is just a hypothetical term. It cannot exist in real life.

We have already talked about the consequences of recession in above statements. But when the nation 's economy reaches boom, it tends to reach the peak. Every macro economic variables are affected in different ways than