Media Commentary

Media Commentary

Article information
1. Source: ABC News
2. Title: GDP: Happy 25th birthday to Australia's economic growth
3. Author: ONG, Thuy
4. Date of publication : 07/09/2016
Summary paragraph
1. Australian economy grew by 3.3% over the year to June 2016
2. Growing at the fastest rate in 4 years
3. Signs look good, but it is still possible for a recession to occur
4. Unemployment rate is 5.7% nation-wide, but higher in WA & SA
5. GDP has only grown because of government spending
6. Private investment spending & exports have decreased by a large amount
7. Consumption spending has also decreased by a large amount because of large household debt levels
8. Do NOT introduce your economic concepts yet - talk about the concepts in the main body of your commentary
Concept 1: GDP
1. Definition
  1. Market value of all final goods & services produced within a nation's geographic borders during a period of time, usually a quarter or a year
2. Explanation
  1. GDP is calculated by totalling all of the spending on final goods & services in the economy. GDP = C + I + G + (X - M)
    1. Households (as Consumption spending)
    2. Government (as Government spending)
    3. Firms (as Investment spending)
    4. Overseas sector (as Exports)
3. Supporting evidence from the article
  1. GDP growth was 3.3%, slightly above average & exactly what economists were predicting
  2. GDP growth was at fastest rate for 4 years
  3. Whilst the economy is in "good shape", there is still potential for the economy to go into recession
    1. Defined as two consecutive quarters of negative GDP growth (or a situation where the economy is shrinking)
    2. This could occur because mining exports are no longer making up a large part of the economy
  4. There is also concern about what caused the increase in GDP
    1. Government spending on building projects (G2) added 0.7% to GDP
      1. A very large addition to GDP
      2. Government spending was large enough to offset decreases in other sectors of the economy
      3. If G decreases, the economy may slow down
      4. G2 mostly went towards building roads & other transport-related infrastructure
    2. Investment is "in a state of collapse", therefore is not contributing much to GDP
    3. The External (or foreign, or overseas) sector contracted, therefore it did not contribute as much to GDP
  5. Household consumption also decreased, so this is not contributing as much to GDP
Concept 2: Circular flow model
1. Definition
  1. A diagram showing the flow of products from firms to households, the flow of resources from households to firms & the flow of money payments in return
  2. Sectors include households, firms, the government sector, the financial sector & the foreign sector
2. Explanation
  1. Households sell resources (land, labour, capital & enterprise) to firms in the resource market. In return, households receive income. Households then spend most of their income purchasing goods & services from firms in the product market.
  2. Households save money in bank accounts, this is considered to be a leakage from the model into the the banking (or financial) sector. The money is then injected back into the model as businesses borrow money from banks to invest in capital.
  3. The government collects taxes from households and businesses, which represents a leakage from the model. The government then injects money back into the model as government spending on wages for public employees (such as teachers, nurses &police officers) (G1) & for public infrastructure (such as roads, bridges, schools & hospitals) (G2).
  4. Households & businesses spend money on purchasing goods & services from overseas (imports) which represents a leakage from the model, as money is flowing out of the model, to foreign economies. Consumers from overseas countries purchase goods & services from Australia (exports), which allows money to flow back into the Australian economy (injection).
3. Supporting evidence from the article
  1. 1st point
  2. 2nd point
  3. 3rd point - you get the idea
Concept 3: Business Cycle
1. Definition
2. Explanation
Conclusion
1. Sum up the content of the article
2. Re-state how your first concept related to the article
3. Re-state how your second concept related to the article
4. Re-state how your third concept related to the article
5. Do NOT include any new information

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