Look at an issue of The Australian newspaper from one day during the term and answer the following questions?

Look at an issue of The Australian newspaper from one day during the term and

answer the following questions (provide full reference and a photo copy or the cutting of

the article).

i) What is the top economic news story? Which of the big macroeconomic questions does it

deal with? (It must deal with at least one of them and might deal with more than one.)

ii) What tradeoffs do the news items discuss or imply?

iii) Write a brief summary of the current news item using economic vocabulary and basic

theory that you have learnt in this chapter one and as many as possible of the key terms listed

on page 15 of the set textbook (for example: factors of production, globalisation, human

capital, labour, opportunity cost, profit, rent, scarcity & wages).

1 Answer

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  • Anonymous
    9 years ago
    Favorite Answer

    Strong jobs figures put rate cut in doubt

    Expectations of a May interest rate cut have been undermined by signs that Australia's jobs

    market is healthier than previously thought.

    More than 44,000 jobs were created across the nation in March, the Australian Bureau of

    Statistics said on Thursday, keeping the unemployment rate steady at 5.2 per cent once

    population growth was factored in.

    That was well above economists' expectations that 5,000 jobs would have been added to

    the economy for the month and marked a sharp turnaround from February when more than

    15,000 jobs were lost.

    Economists are divided over how the better-than-expected data will affect the chances of an

    interest rate cut in May.

    The Reserve Bank of Australia opted to keep the cash rate on hold at 4.25 per cent in April

    but flagged a likely rate cut next month.

    While noting that the economy was underperforming, which suggests a lower cash rate is

    needed, the RBA indicated it would only cut the rate if consumer price index (CPI) data, to

    be released later this month, showed underlying inflation remained subdued.

    However, some economists warn the latest jobs data could undermine the case for a rate cut.

    RBC senior economist Su-Lin Ong said the data could help ease pressure on the RBA.

    Economics Part A

    "A number like this probably provides the market with a reminder that rate cuts aren't a done

    deal," she said.

    Nomura rates strategist Martin Whetton agreed.

    "On the basis of this data, we wouldn't expect that the RBA would find slack in the economy

    that's going to lead through to lower inflation," he said.

    However, HSBC Australia chief economist Paul Bloxham believed the RBA would be more

    interested in inflation data than the unemployment rate.

    "I think if the CPI numbers are low enough, the RBA will still feel that they can cut rates

    from here," Mr Bloxham said. (Evan Schwarten, AAP, The West; April 12, 2012)

    There is increase in employment in the last one month which might help in putting

    i)

    hold to rate cut by Reserve Bank of Australia. There are positive signs in Australian job

    market with increase in 44000 employed people showing signs of recovery and better

    production levels. This will also increase private consumption giving rise to increased

    demand.

    This story deals with various macroeconomic questions from unemployment rate,

    inflation, production, labour, interest rate policies, money flow in the economy etc.

    ii)

    This news article describes tradeoffs between interest rate cuts, inflation rate and

    unemployment rate.

    First of all, this news article discusses the strong revival in the Australian job market

    iii)

    seen in the month of March. More than 44000 jobs were created in the month of March

    across the nation which showed great signs of growth and production. It also says that

    unemployment rate is steady at the rate of 5.2 percent.

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