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Macroeconomics deals with aggregate indicators
Macroeconomics deals with aggregate indicators. These include GDP, unemployment rates, inflation, exchange rates, savings, investment, interest rates etc. While you will learn each of these aggregate indicators, it is also important to understand the interrelations between the different indicators and between the different sectors of the economy. The objective of this research is to provide you with the opportunity to work with actual macroeconomic data and events and conduct relevant analysis (at basic level). There are 2 parts in this research. Both parts are compulsory.
Part 1: Country specific - Measuring macroeconomic performance, fiscal policy, applying principles and concepts of macroeconomics, use of data to examine key macroeconomic variables. (20 marks): Page limit 6. The objective of part 1 of this research is to familiarize students with actual GDP data, the different components, database, and basic analysis to understand and interpret such data. Select any ONE Pacific Island economy and analyze its macroeconomic performance over the past 10 years. You should use the latest data available to conduct this analysis, and use THREE economic variables to analyze the economy, one of which must be Gross Domestic product. Your report should explain which variables are used, why and then use those variables, apply your economic theory and principles to analyse the economy. Part 2: Macroeconomic indicator: Cross country comparison. (20 marks): Page limit 6. The objective of this part of the research is to provide students with the skills to analyze macroeconomic indicators across countries. While analysis of a macroeconomic indicator (example GDP) within a country is important to understand the growth path of the country, it is also important to analyze (compare) these indicators across different countries. You will compare with the country you analyzed in Part 1 (this means you will use your results in part 1 here plus do some additional work). Choose any ONE macroeconomic variable that you used in Part 1 to analyze your chosen country. Choose another Pacific Island country and compare the performance of the two economies in terms of the chosen macroeconomic variable. For example, if you select GDP, then you will compare the GDP of the two countries. Your write-up must provide sufficient comparison. You must select certain points in time and provide reasons for the differences or similarities. These points in time can be the selected years where you observe significant differences or similarities. Based on your comparison, you must provide at least THREE policy suggestions for either one of the countries.
Marking rubrics Cover page: The cover page should 3 marks include the Tutorial day & time, tutors name, and group members name and ID. Reports without these details will face a penalty of 2 marks. Group task allocation: include a table 3 marks which shows how the tasks were shared between the group members. Students identified as not contributing anything to the project will be penalized here. This must be your page 2 Part 1 Part 1:20 marks Introduction: A clear, succinct introduction which explains the issue to be discussed. (3 marks). Main discussion: should separately discuss each macroeconomic variable, discussion should be supported by theory, data and research. (15 marks) • Conclusion (2 marks). Part 2 Part 2:20 marks Introduction: A clear, succinct introduction which explains the issue to be discussed. (3 marks). Main discussion: Should provide a clear comparison using appropriate data and analysis. Your skills in doing the necessary calculations and use of illustrations will be assessed here. You must clearly identify certain points in time and make
your comparison more specific. Provide three policy that would be feasible. (15 marks) • Conclusion (2 marks). 10 marks Reference: a reference list must be added at the end of the report. Use the APA or Harvard referencing. Please seek help if you are not familiar with referencing. The reference also indicates quality of research. You must use research material to support your discussion Follow of instructions: Turnitin report and submission: reports are submitted with turnitin index of less than 20%, use of font size 12 (times new roman), graphs and illustrations are properly labelled and referenced (as instructed), page limits followed, and other instructions. 4 marks Total /60
Expert Solution
Macroeconomic variables as mentioned in the question are the indicator or signals that presents the relevant trends in the economy. The various Macroeconomic variables that serves as signals are:
a) Gross domestic Product (GDP) - it is the total value of goods and services produced in a country in a year.
b)The unemployment rate- measure of the percentage of people unemployed in a given population despite willing to be employed.
c) Inflation rate- Percentage increase in the overall level of prices, it also shows how they value of money changes over time.
d) Interest rates- The rate that the bank charges from the borrowers
e) Taxes- Percentage of money from the income that is to be paid to the government.
Part 1 -The first part asks us to to choose a Pacific Island Economy and analyze the macroeconomic performance with the help of the indicators .The analysis can be made by following the undermentioned points:
i) Choosing Pacific Island Economy- These are island countries that fall in the Pacific Ocean , some of them are :Commonwealth of the Northern Mariana Islands, French Polynesia, the Marshall Islands, Nauru, New Caledonia, New Zealand, Palau, Solomon Islands, Tonga, Tuvalu, Vanuatu, and Wallis and Futuna,Kiribati,The Federated States Of Micronesia,Fiji.
These above mentioned countries are characterized by small population,limited infrastructure facilities,high cost for transportation,vulnerable to typhoons and storms.
for example : Fiji is around 8lakhs+ as per sources.
ii)Analysis of Macroeconomic Performance- The macroeconomic performance of any country can be best defined through the macroeconomic variables/ indicators which takes into account data that has been observed and recorded over a period of time and thus helps in understanding the changes in the variables.l
-Gross Domestic Product -It is often a measure of a country's strength .GDP is the value of the goods produced within the country in a year. For Pacific Island economies, as of last years reports. Fiji which earlier had a very low percent of GDP now has has the highest GDP,since it is largely urbanized and has become a healthy tourist destination. Whereas countries like Nauru,Palau ,Tuvalu have a very low rate of GDP because of its small number of population.
-Unemployment Rate- The unemployment rate for countries like Fiji,Kiribati is considerably low because of consistent growth in the tourism industry. More people are willing to engage in work as a result. Few countries like Solomon Islands have high rate of unemployment.
- Inflation Rate- The inflation rate in countries like the Solomon Islands,Papua New Guinea is considerably high due to rise in fuel prices ,and such islands are characterized by high transportation and telecommunication costs. Where as in countries like Fiji the case is not so. Some country like Tonga fail to meet their debt commitments which can also result in a rise in inflation rate.
PART 2 - The second part asks us to delve deeper into the topic of Macroeconomic variable where we are required to choose 1 variable and compare with another Country and to suggest policy suggestions,This can be explained with the help of an example:
-For example, if we compare the GDP of Fiji and and Tuvalu ,we see a a large difference between the two. The GDP of Fiji is estimated at US$ 5,535,548.97 as on 2019 whereas, the GDP of Tuvalu is US$47,271.46l.
The reason for such a big gap can be due to the location of the country,the population,the number of people who engage in employment,the government policy,imports and exports,unforeseen dangers like cyclone or typhoons that has a terrible impact on the economy,availability or non-availability of the resources,tourism being a contributor also differs from country to country.
-Policy Suggestions implies the changes that can help in the growth of an economy. Suggestions can be made based on the analysis of the data and after addressing the constraints that such countries can face.
- For example- Most of the pacific island countries are dependent on imports but countries like Fiji ,Papua New Guinea has been successful in earning through exports.Hence other nations can also formulate such export policies.
- Strengthening of the Tourism industry
- Adopting sound banking and insurance policies along with promoting large scale industries
- Proper utilization of natural resources, since these nations are closer to the oceans gives them an advantage that can be used.
- Development of better infrastructure
- Aids from other developed countries
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