Impact of US/China Trade War On Macroeconomics Condition

Running head: ECONOMICS FOR BUSINESS
Economics for business
Name of the Student
Name of the University
Author Note

ECONOMICS FOR BUSINESS
Table of Contents
Answer to question 1:.................................................................................................................2
Evaluating the ability of government to lower carbon emission by implementing tax:............2
Answer to question 2:.................................................................................................................7
Explaining the impact of US/China trade war on macroeconomics condition of Australia:.....7
References list:.........................................................................................................................15

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Answer to question 1:
Evaluating the ability of government to lower carbon emission by implementing tax:
Climatic goals of any can be met by reducing the emission of carbon by way of
imposing price on carbon. The target of climatic change is being met by Australia with the
objective of supporting the effective response internationally and improving the environment.
It has been argued by economist that the emission of carbon can be reduced in an
economically efficient way with the help of a well-designed carbon tax. Depending upon the
usage of generate of revenue by way of carbon tax, there can be significant variation in the
economic effects of tax. Reduction of carbon emission can be done by the adoption of the
cost effective regulatory approach by way of carbon pricing using the instrument of carbon
tax (aph.gov.au, 2020).
For instance, the economy of any country is positively impacted when the revenues
generated from the carbon tax is used for the reduction of a more distorted type of tax. It is
identified from the estimates that in the countries around the world, 44% of revenue
generated from carbon tax were used to lower the other taxes. Implementation of carbon tax
is argument in terms of the benefits derived such as raising revenue, encouraging alternatives,
improving environment and generation of socially efficient outcomes. In the early 2018,
implementation of subnational and national carbon system were scheduled to be implemented
all around the world. The implementation of carbon tax makes producers and consumers to
take account of the social costs of pollution that is the main source of emission of carbon and
thereby greenhouse gases (Geroe, 2019).
The concept of carbon tax to reduce the carbon emission can be understood from the
economical point of view. Government intends to address the negative externalities which is
the social cost of any activities using tax which is a policy based on market approach. For the

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producer or the business, social cost is less that the private cost and this private cost would
increase with the imposition of tax on the producers. So the polluters emitting carbon are
incentivize to emit less carbon because it their private cost is increasing by the tax
implementation. This externality is expected to be counterbalanced by the tax
implementation, however, determining the appropriate tax level is a bit difficult for the
government. These external costs on the environment is internalized by the carbon tax which
is added to the products’ price. It is the consumer and producer who have to bear the total
costs which includes the external environment costs as well. Consumers and producer both
are deincentivized from using or producing the goods that are carbon intensive and this would
in turn results in lower emission of carbon (Mazengarb and Mazengarb, 2019).
A carbon tax or carbon pricing scheme is introduced by Australian government
through the clean energy Act, 2011. This initiative was intended to develop the clean energy
technologies that would help in controlling the emission as well as supporting the economic
growth. Nevertheless, the step taken by the government was successful in its effort to reduce
the emission of carbon and at the same time, it faced challenges in terms of opposition from
public. This is so because the development of such technology resulted in increase in price of
energy for both industry and household. An effort on part of Australian government to
increase the carbon taxes were shelved due to the rise in price of energy which the angry
voters backlashed. A cap and trade program was rolled out by the labor government of
Australia in year 2012 where the carbon was taxed at $ 23 per tonne and the program was
repealed eventually. In the current scenario, there is a lenient carbon pricing in place where
the large industrial polluters can buy carbon credits as a way of compensation if they exceed
pollution baseline (Zhang & Wang, 2017).
The whole idea of carbon tax is spreading widely but it has also received various
backlash by industrials and political that such tax raises the energy bills. A new report from