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(Doc) Economics for Business

Added on - 23 Mar 2020

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Running head: ECONOMICS FOR BUSINESSEconomics for BusinessName of the StudentName of the UniversityAuthor note
1ECONOMICS FOR BUSINESSTable of ContentsIntroduction................................................................................................................................2What is meant by stable equilibrium..........................................................................................2Government intervention...........................................................................................................3Stability Analysis for Australian Economy................................................................................4Price level...................................................................................................................................5External Stability for Australian Economy................................................................................6Conclusion..................................................................................................................................7Reference....................................................................................................................................8
2ECONOMICS FOR BUSINESSIntroductionFree market is a market condition where demand and supply forces worksindependently to bring equilibrium for the market. The equilibrium once obtained maintains astable state without presence of any external forces. The term ‘stable equilibrium’ refers to astate of rest where any fluctuation from this position automatically back to its originalposition. The economy of a nation is said to be stable if stability is maintained in differentmacroeconomic indicators such as GDP, price level, employment state and even for theexternal sector of the economy. In this paper, current state of Australian economy is analyzedto examine the stability of the economy.What is meant by stable equilibriumEquilibrium is a position where all the active forces are at rest. The forces work infree market is the force of demand and supply. Demand curve represent the preference andbuying decision of the buyers whereas supply curve corresponds to the decision of sellers.Equilibrium price is that price where willingness to pay of buyers matches with the price catwhich sellers willing to sell the goods (Garda & Ziemann, 2014). Corresponding to this priceequilibrium quantity is determined which is the quantity supplied in the market based on thedemand of buyers. Any upward or downward movement of the equilibrium price meansmismatch between supply and demand creating either excess supply or excess demandsituation. Market cannot sustain with excess supply or excess demand. To maintain balancebetween supply and demand prices is used as an adjustment tool.
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