Assignment on Business Economics in PDF

Running head: BUSINESS ECONOMICS
Business Economics
Name of the Student
Name of the University
Author Note

BUSINESS ECONOMICS
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Table of Contents
Answer to question 1.......................................................................................................................3
Answer to question 2a.....................................................................................................................3
Answer to question 2b.....................................................................................................................3
Answer to question 2c.....................................................................................................................3
Answer to question 2d.....................................................................................................................4
Answer to question 2e.....................................................................................................................4
Answer to question 3a.....................................................................................................................4
Answer to question 3b.....................................................................................................................5
Answer to question 3c.....................................................................................................................5
Answer to question 4.......................................................................................................................6
Answer to question 5a.....................................................................................................................7
Answer to question 5b.....................................................................................................................7
Answer to question 5c.....................................................................................................................7
Answer to question 5d.....................................................................................................................7
Answer to question 5e.....................................................................................................................8
Answer to question 6.......................................................................................................................9
Answer to question 7.....................................................................................................................10
Reference list.................................................................................................................................11

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Answer to question 1
The following problems a government might face during the implementation of a
balanced budget approach to its spending.
Difficult to enforce: The entire proposition of the budget does not get disclosed before the
official announcement of the budget. Therefore, the consequences of the government budget
cannot be predicted (Leduc & Liu, 2016). It can bring positive as well as negative impacts for the
economy. The allocation of the budgetary expenditure may not be approachable for the entire
population.
Aggravating recessions: Balanced budget approach might put the economy in danger condition.
This budgetary method allows the government to rise the public spending on the development
activity. Hence, the government expenditure might exceed the public revenue in shortly.
Worsen the debt burden condition: It deteriorates the government’s debt burden condition,
which in turn, lowers the economic growth (Taylor, 2014). The economy experiences a sluggish
growth rate due to a lack of credit generation.
Answer to question 2a
The number of frictional or seasonal unemployed in Eastralia is (1750 + 370) = 2120
Answer to question 2b
The number of structurally unemployed is (800 + 250 +150) = 1200
Answer to question 2c
The number of cyclically unemployed is 370.

BUSINESS ECONOMICS
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Answer to question 2d
The people in (v) fit into the cyclical unemployment.
Answer to question 2e
Considering the statement, it can be said that there exists clear difference between
frictional, structural and cyclical unemployment. Frictional unemployment occur when people
are looking for a job or people or shifting their jobs from one sector to another sector. Hence, the
sum of seasonal works of 1750 and 370 people looking for employment comes under frictional
unemployment. Structural unemployment happens when the production technology gets
modified (Fujita & Moscarini, 2017). In this case, the sum of 800 motor vehicle workers who
have been retrenched due to lower demand for motor vehicle and 250 unemployed skilled
technicians due to lack of mechanical skills along with 150 unemployed workers owing to
contraction in the export sector. The cyclical unemployment causes due to sluggish economic
growth as well as low employability of the aged workers (Horta, Meoli & Vismara, 2016). Here,
370 skilled workers who are aged over 55 years will be counted under the cyclical
unemployment.
Answer to question 3a
As per the statement, the government has been asked to design an anti – recession
stabilization policy while the public sector is experiencing sluggish growth. Fiscal policy does
not give effective outcome when the performance of the public sector gets worsened. In this
regard, expansionary monetary policy is the best effective measurement under the anti-recession
policy. The central bank lowers the interest rate as to intensify the money supply, which in
return, boosts the employment and production level of the country.