a. (1 mark) Using the published national accounts for Australia and the United States for the period December quarter 2017, compare the behaviour of economic growth in these two countries. You should consider the year to the December quarter 2017 (that is, December quarter 2016 to December quarter 2017), and the three-month period to the December quarter 2017 (that is, September quarter 2017 to December quarter 2017).
So, comparing these two economies, what was the rate of growth of real GDP in each of these two periods? Use seasonally adjusted data.
b. (1 mark) Which components of expenditure grew at the highest and lowest rates and which contributed the most and the least to GDP growth in each of the two economies for the three-month period September quarter 2017 to the December quarter 2017. Provide the values in tabular form.
In answering part (b) you should look at the following expenditure categories for Australia: Final consumption expenditure, distinguishing Household from General Government, Total Gross Fixed Capital Formation, distinguishing Total Private Gross Fixed Capital Formation from Total Public Gross Fixed Capital Formation, Changes in inventories and Exports and Imports (or Net Exports).
“Leading indicators are also used by central banks in order to make many monetary policy decisions.
For instance, a central bank may opt to lower interest rates or implement easing policies if leading indicators suggest that the economy is faltering. The opposite may be true if leading indicators suggest that the economy is strengthening. Investors may respond by selling equities when interest rates are on the rise or buying equities when interest rates start to fall.”