Intermediate Macroeconomics Research Paper Example | Topics and Well Written Essays - 1000 words

Intermediate Macroeconomics - Research Paper Example The decrease in the interest or cash rate will encourage the consumers and investors to spend more money. This, in turn, will increase the overall output and, as a result, will force the GDP growth rate to increase in the next two quarters. Hence, the decreasing inflation rate will contribute towards the real GDP growth for 2012 quarter IV and 2013 quarter I. This is also supported by the depreciating Australian currency. 2. Inflation Rate for 2012 Quarter IV and 2013 Quarter I: It is being forecasted that the inflation rate will be 0.5 percent in the fourth quarter of 2012 and 0.6875 percent in the first quarter of 2013 (derived from the Australian Government Budget 2012–13). The inflation rate is being forecasted to be down in the fourth quarter of 2012 because of the less capital investment in response to the weakening economic conditions all over the world (RBA statistics). However, this low inflation rate will push the RBA to decrease the cash rate and, thus, force the in vestors to invest in the market. This, in turn, will increase the money circulation and spending and, hence, will increase the demand which will force the inflation rate to increase in the first quarter of 2013. This is also supported by the decreasing interest rates (RBA statistics). ... This is because of the decreasing inflation rate in the previous quarter and underestimated market demand (RBA statistics). Hence, the decrease in the inflation rate and market demand will force the RBA to take necessary measures to increase the overall economic growth of the country. In order to increase the demand and improve the investment activities, the RBA will decrease the cash rate. The decreasing cash rate will discourage the investors and consumers from saving their money and will, hence, increase the consumer spending, investment and market demand, which, in turn, will result in increasing the overall economic growth in the country (Mankiw, 2009). The RBA will keep this decrease in the cash rate for a couple of months and will monitor the domestic and international market. The increasing market demand will eventually result in increasing the inflation rate and, hence, RBA will be forced to again increase the cash rate in the second quarter of 2013. 4. Average Exchange Rate between the Australian Dollar and the US Dollar to Prevail from November 1, 2012 to June 30, 2013: The average exchange rate between the Australian Dollar and the US Dollar, which is more likely to prevail from November 1, 2012 to June 30, 2013, is 0.98 US dollars per Australian dollar (Derived with the help of Australian Dollar Currency Exchange Forecast). This can be directly related with the decision of the RBA to decrease the cash rate and interest rates. One reason behind the lengthened high exchange rate or value of the Australian dollar has been the difference in the interest rates prevailing in Australia and United States. The decreasing interest rate will force the investors to look for some other places for investment and hence, there

Article Summaries Essay Example | Topics and Well Written Essays - 250 words - 1

Article Summaries - Essay Example 1-2). GDP estimation in the US begins with a best level estimate that is usually produced once every five years. It is typically calculated on an annual and quarterly basis. The annual estimates uses data collected from surveys done by the National Census Bureau’s covering about 150,000 reporting units. On the other hand, the quarterly estimates come from the monthly surveys done by the Census Bureau covering about 35,500 reporting units (Landefeld et al. 4-5). The estimates done every five years also incorporate new definitions and ideas that update the accounts to keep with up-to-date with changes in the economy. A method called â€Å"commodity-flow† is, for example, used by the Bureau of Economic Analysis to develop best level estimates for final sales based on product category (Landefeld et al. 7). The bureau also uses price-times quantity method to provide estimates for products with inconsistent data (Landefeld et al. 9). Estimates for investment, exports, imports, and government components also have their unique methods of determination. The final expenditures for the federal government, for example, are determined using budget data (Landefeld et al. 11-19). There are, however, several challenges associated with GDP measurement and determination of national accounts. There is no enough data for measuring sector services. There are also components that are difficult to value. There is, therefore, need to develop comprehensive estimation methods that can value all products by virtue of their nature (Landefeld et al. 22) The article is informative and provides detailed information concerning GDP and the methods used in its estimation. I particularly appreciate the author’s contribution in detailing the history behind the development of the framework that estimates GDP. It is, however, unfortunate that in spite of the developments