ECONOMIC PRINCIPLES AND DECISION MAKING: REFLECTIVE JOURNAL.

Running head: ECONOMIC PRINCIPLES AND DECISION MAKING: REFLECTIVE
JOURNAL
Economic Principles and Decision Making: Reflective Journal
Name of the Student
Name of the University
Course ID

ECONOMIC PRINCIPLES AND DECISION MAKING: REFLECTIVE JOURNAL1
Table of Contents
Reflective on assessment 1 and assessment 2..................................................................................2

ECONOMIC PRINCIPLES AND DECISION MAKING: REFLECTIVE JOURNAL2
Reflective on assessment 1 and assessment 2
Assessment 1 is concerning to microeconomics concepts that we have learned in the
course. For the assignment, it was required to select one current issue of Australian economy and
explains the issue using relevant concepts of microeconomics. For this part of assignment I have
selected the issue of housing market volatility in Australia. Housing price is Australia especially
I capital cities experienced a steady increase since 2000s resulting in housing affordability crisis.
Since 2017, despite relatively cooling down of housing market prices still remain high enough
that housing affordability remains one of the concerning economic issues. On researching the
topic I have found that fluctuation in price of houses is related to demand and supply side
volatility of the market. From the course, we have learned that demand of a good refers to the
willingness of buyers to purchase a good at given price and at a given time. Supply of a good
indicates willingness of producer to sell a good at the given price and at a given time. We have
studied that it is the interaction of demand and supply that determines equilibrium outcome
(equilibrium price and equilibrium quantity). Deviation from the equilibrium brings a change in
market output. The housing market scenario especially the fluctuation of housing prices has
helped me to understand how changes in demand and supply works in real life situation. On the
demand side factors affecting housing demand are higher income, demographics, high rents,
lower interest rate and greater credit availability. Because of the uninterrupted economic growth
people in Australia experienced a continuous increase in their income. This encouraged people to
improve quality of houses and invest in housing causing an increase in housing demand.
Demographic dynamics like relatively strong growth of population and decrease in average
household size contributes to an increase in demand for housing. Rent is alternative to housing
ownership. Increasing trend in rents leads to a higher demand for home ownership which is