This case study focuses on the Australian economy in 2019, before the COVID-19 pandemic hit. On 4th September 2019, the Australian Bureau of Statistics (ABS) published Real GDP data for the quarter ending June 2019. (The reporting of GDP always lags by about 2 months as it takes time to collect and compile data). The data showed that the Australian economy recorded quarterly growth of 0.5%. However, there was a decrease in Real GDP per capita. Furthermore, Real GDP per capita in June 2019 was lower than it was a year before (June 2018). Overall, while Real GDP still increased, the growth was very weak; the weakest on record since March 2001. (Source: Australian Financial Review and The Guardian).  Required:

This case study focuses on the Australian economy in 2019, before the COVID-19 pandemic hit.

On 4^th September 2019, the Australian Bureau of Statistics (ABS) published Real GDP data for the quarter ending June 2019. (The reporting of GDP always lags by about 2 months as it takes time to collect and compile data). The data showed that the Australian economy recorded quarterly growth of 0.5%.

However, there was a decrease in Real GDP per capita. Furthermore, Real GDP per capita in June 2019 was lower than it was a year before (June 2018). Overall, while Real GDP still increased, the growth was very weak; the weakest on record since March 2001. (Source: Australian Financial Review and The Guardian). 

Required:

Question 1. Clearly explain what Real GDP per capita means.
Clearly explain why Real GDP per capita decreased whereas there was still growth in Real GDP for the quarter ending June 2019. 

Question 2. Given the economic conditions described above, predict how the following key macroeconomic variables would be like for the quarter ending June 2019. 

• Real GDP 
• Unemployment rate 
• Inflation

Question 3. Draw an appropriate graph(s) to illustrate the Australian economy in June 2019, considering the previously described economic conditions. 

Question 4. Given the economic conditions described above, recommend the appropriate monetary policy that the Reserve Bank of Australia (RBA) should implement.
Clearly explain why this type of monetary policy is needed.