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Economic Interpretations Assignment

   

Added on  2021-05-30

7 Pages1372 Words31 Views
Running head: ECONOMICS ASSIGNMENT Economics AssignmentName of the StudentName of the UniversityAuthor Note

ECONOMICS ASSIGNMENT 1Increased House Rents in Wellington: Economic InterpretationsThe economic scenarios in the markets for different commodities and markets dependprimarily on the supply and the demand side forces and their inter-dynamics, which in turnleads to the determination of the price and quantity of the product or service in consideration,to be produced in the market. While the demand side are represented by the buyers ofdifferent products and services, the supply side shows the activities of the sellers of the same. However, often leaving the dynamics of the demand and the supply forces in thehands of market itself, without any intervention from the government of the countries maylead to the creation of market distortions and biasedness where either one or both the partiesface loss of welfare. Thus, in some instances government restrictions and interventions arerequired. However, the interventions of the government do not always create the desiredeffects in an economy. Keeping this into consideration, the recent crisis of an increase in the rent in thehousing accommodation sector of Wellington, in New Zealand is considered and theplausible reason behind the same, which is highlighted by many to be the current financialaids provided to the students in this region by the government, is viewed and interpreted inthe light of the theoretical and conceptual framework of economics. Recent crisis of increased rent in Wellington In the recent period, the government of the concerned region has taken several stepsto help the students, in the aspects of their cost of living while gaining educational degrees.The primary steps which the government has taken is that of increasing the financial supportto the students including the increment in the amount which can be borrowed by the studentsin terms of their cost of living while studying in the country (Rashbrooke, 2013). Thegovernment has also removed the fees which the students needed to pay for the first year of

ECONOMICS ASSIGNMENT 2their degree courses. The primary objective behind this intervention of the government of thecountry, in the aspects of provision of financial supports to the students of the country, is toshield the students from the high cost of living in the country, which can be seen from thefollowing figure: Figure 1: Consumer Price Index of New Zealand over the years(Source: Tradingeconomics.com, 2018)As is evident from the above figure, the country has experienced a consistent increasein the Consumer Price Index of the same, which in turn indicates towards the presence of anoverall high average price level and a high cost of living of the people in the country. This inturn is expected to make it difficult for the students, who usually do not earn substantialamounts of money or monthly wages, to sustain themselves and bear their basic minimumexpenditures, on amenities like food, shelter and clothing. Given this situation, leaving the dynamics in the hands of market forces would havebecome even more painful and economically hurting for the students of the country. Thus, thesteps taken by the government in terms of financial support and aid to the students seems tobe an optimal measure and policy framework. However, there are arguments against suchmeasures of the government in the aspect that the increased economic welfare of the students

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