Macroeconomic objectives and theory — Question 14

The data shows the national unemployment rate was approximately 5% in 2023, which was close to its lowest rate of 4% during 2006. In 2023, inflation of 2.5% was within the target range of the Reserve Bank, so it appears the UE rate was not yet at the non-accelerating inflation rate of unemployment. This indicates cyclical unemployment may not be a problem, and as the unemployment has persisted over time, there may be high structural unemployment.

Unemployment rates are not uniform across Australia. While some regions have very low unemployment, other regions have high unemployment rates of 14% in 2023. This UE rate appears to be entrenched at 14%, as it has not fallen in line with the national rate over the last 2 years.

Policy levers in 2023 could have targeted locations that have higher

Analysis (6 marks)

[1 mark]

• describes the trend in national UE using data and a date

[1 mark]

• describes the trend in inflation using data and a date

[1 mark]

• interprets the UE and inflation data

[1 mark]

• interprets regional UE data

[1 mark]

• identifies a stationary period of UE data

[1 mark]

• interprets a stationary trend in UE

Evaluation (4 marks)

[1 mark]

• identifies a valid reason for targeting regional UE

[1 mark]

• decides on a valid employment policy

[1 mark]

• uses equity as the economic criterion for the decision

[1 mark]

• uses economic reasoning to support the policy identified