Role of Economic Policies and Legislation

The assignment delves into the crucial role played by economic policies and legislation in shaping a country's economic landscape. It examines various economic principles such as production standards, the trade-off between inflation and unemployment, trade promotion strategies, and the impact of government decisions on market efficiency and equity. The document aims to illustrate how these factors contribute to stable economic growth and sustainable wage rates.

Economics: Principles, Models
and Policies

Table of Contents
Economics: Principles, Models and Policies...................................................................................1
INTRODUCTION...........................................................................................................................3
ECONOMIC PRINCIPLES.............................................................................................................3
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Economic policies played a significant role in the growth and development of the
country. There are various microeconomic factors which can influenced of a nation wage
earners, businesses and economic growth. The present research report is related with the
Australian government economic policies which can improving its position at the domestic as
well as the global level (Iossa, and Martimort, 2015). There are various economic principles
which can be used by the government in order to increase wage rate, economic growth and make
a sound business environment within the country.
Price ceiling and price floor:
Price ceiling is the maximum price of any product or service at which the product or
service can be sold in market place. If the ceiling price is high, then the equilibrium price it will
have no effect on the equilibrium. And if the ceiling price is low then the equilibrium price it will
lead to the shortage of the good. If the demand is more than the supply, then it shows the
shortage of goods and it will lead to loss due to inefficient quantity produced and supply. If the
product is sold at high price the it is cause the profit for the organisation. Price floor is the
minimum price of any product which a buyer has to offer to the seller for buying the product. If
the price floor is less than the equilibrium price it will no effect on the equilibrium and if the
price floor is more than the equilibrium price it will lead to excess supply. If the price floor is
more the product price, then it is the profit situation for the seller and if the floor price is less
than the product price then it will cause loss.
If prices reach to the higher level, in long run then it effects the money. But short run is
more complex compare to long run. In short run, if there is an increment of money then it will
affect the level of spending as well as demand for any products and services. If demand of any
product or services get high then it will affect the prices of that product, it will increase due to
increase of demand. But same time it encourages their production of goods and services they
produce and helps in reduce unemployment because if there is more production then they need to
hire more workers (Einav, and Levin, 2014)

Figure 1Price ceiling and Price war
If prices reach to the higher level, in long run then it effects the money. But short run is
more complex compare to long run. In short run, if there is an increment of money then it will
affect the level of spending as well as demand for any products and services. If demand of any
product or services get high then it will affect the prices of that product, it will increase due to
increase of demand. But same time it encourages their production of goods and services they
produce and helps in reduce unemployment because if there is more production then they need to
hire more workers
Minimum wage in Australia:
Each and every country is having their own standard of minimum wage rate. In the
context of Australia, they having their own laws regarding the minimum wage rate. According to
the government authorities the national minimum, wage rate is $13.74. the per week wages is
approx. $522.12 Australian dollars. The change in this wage rate is 2014 $16.87 per hour. The
per week wage rate is $640.90.

Minimum wage and economic growth of Australia: Today Australian economy is one of the
leading economy with approx. $1.2 trillion. The GDP growth rate of the country is also good
approx. 2% as compared to other developed country. In the last two-decade Australian economy
is growing as a result the wage are of the country also growing. This can be understanding by the
given data and information.
Year GDP Minimum wage (Per week)
2001 $376 Billion $590
2002 $424 Billion No change
2003 $540 Billion $730
2004 $654 Billion No change
2005 $734 Billion No change
2006 $781 Billion No change
2007 $949 Billion $700
2008 $1057 Billion No change
2009 $997 Billion No change
2010 $1249 Billion $26.oo per week increased
2011 $1504 Billion 3.4% increased
2012 $1561 Billion 2.9% increased
2013 $1449 Billion 2.6% increased
2014 $1229 Billion $1114 approx.
Advantages and Disadvantages of Minimum wages
Advantages of minimum wages :
Minimum wages depends on the type of market. It can be ineffective and inefficient in
nature.
It is very much good for worker and society.
Minimum wages is able to secure a higher wage and employment level in the market.
It fulfils the demand of the workers and society it makes easy buying for the worker on the
willing goods and services.
The demand of labour is higher then the quantity supply of labour.

Disadvantages of minimum wages :
it arises unemployment in the case of competitive labour market because the organisation
can demand less labour and high wages.
Minimum wages arises cost push inflation it happens because firm faces an increase in cost
which are passed on to customer.
It can be increase in the number of worker on the black market so the organisation can
avoid to pay minimum wages.
It arises limited impact on relative poverty.
This is one of the major principles of economics which is relate the standard of living
with the production of goods and services. For example the average income of an individual in
US is approx. $35000, in Mexico citizen income is approx. $18000 whereas Kenya citizen is
approx. $1000 (Gómez-Baggethun,and et. al., 2010). This large variation in average income is
reflected in various measures of the quality of life. Citizens of high-income countries have more
TV sets, more cars, better nutrition, better healthcare, and a longer life expectancy than citizens
of low-income countries. Changes in the living of standards over a time period are too large.
The main reason for this is the various economic policies such as minimum wage rate which can
help to increase living of standards and consumption. Therefore, Australian government required
that to use such polices which can help improve per capita income of an individual which can
leads to increase in the standard of living and also increase in the demand of good and services in
the economy (Einav, and Levin, 2014).
Government policy can be most useful for country and economy development at this time
have to decide how to maintain situation in Australia for current wages. Government is the broad
reason to interface with the economy because government have rights to control system and
activities of the market. In the market various kinds of situations are develop like market failure
in this case government make some special rule to manage problems and issues for country,
market failure means in this time market left on its own allocate resources efficiently. Next
situation is externality, it means that happens by the persons daily activities so it can also affect
the economy so in this situation develop some rules and regulations to control that rues have to
follow by the all persons of that particulars countries (Flanagan, Uyarraand Laranja, 2011). And

then last one is market power , this is the ability of any particular economic actor that can be
small of actors and large that have to substantial influence on market prices and economy
development of Australian country. So Australia government have to follow all rules and
regulation and should determine customers needs and wants then take decisions on any particular
situation and also take decision on the current wages for the employees of an business .
Minimum wage and business cycle:
Country can calculate minimum pay rates, awards, penalties by the use of pay calculator.
Pay calculator can help in find out the award if any are available. If persons are connected with
any enterprise or agreement or other registered agreement person can use the pay calculator for
check the agreement for rates. Every employee may have different pay entitlements depending
on their work capacity.
This study emplanes that the low skilled employees employment effect of minimum wage
increase over the business cycle. Some policy makers are concerned about forcing high labour
costs on low margin business. It is concluded that study of the low skilled employment effects of
minimum wages. The Australian minimum wage is the minimum rate of pay for hours worked to
any employee who is not connected by any award or agreement. Every organisation needs to
improve their business life cycle for improving organisational strength. The business life cycle
consist on major 4 aspects : establishment of the business it is the birth of the business and then
growth of the business it is the situation of gaining regular visitor or customer's and when the
organisation reached at the maturity level this stage consists when the business earn extra profit
and then post maturity.
Australia and unemployment:
Unemployment arises when a person is actively searching for the employment is unable
to find work. The frequently measure of unemployment is the unemployment rate, which is the
number of the unemployed people divided by the number of employed people. Australian
unemployment rate was 5.9 percent. The average unemployment rate in Australia was 6.91
percent it is reaching high at 11.20percent . The meaning of long term unemployment is the
number of people how have been out from the work for more then a year. The unemployment
arises when the worker who are employed but are willing to work for more hour for more
payment returned tom a record high 8.7 percent or 1.1m workers.
Some impacts of unemployment:

 Future employment woes - if the person is unemployed for a long time then it will
very hard to getting employment in any organisation.
 Less overall spending- if the large number of people are unemployed and they have
less amount of money to spend then the other company suffers from less consumer
demand.
Impact of these factors on Australia economic growth:
It is essential for a country is that the unemployment and minimum wage rate having a large
impact on the economic growth. In the context of Australia, in the last decade the country
economic performance is quite good which can help to increase the minimum wage. It can help
to improve standard of living which can enhanced the demand of goods and services in the
economy. It can lead to attract large number of investor in an effective manner.
If there is any changes in what the government spends, amount of taxes that paid, then it
will make an impact on combination of inflation and unemployment. Because all of these are so
important factors that affect the inflation rate of the economy and unemployment of any country
(Flanagan,Uyarraand Laranja, 2011).
Illustration 1: Aus Inflation rate

CONCLUSION
As per the above mentioned report it has been concluded that the role of economic
polices and legislation is too essential in the economy. This report is discussed about the various
economic principles which can includes country production- standard of living, trade-off
between inflation and unemployment in short run, trade promotion, organizing trade economies,
government decision making to promote efficiency and equity in the market which can provide
stable growth rate and good wage rate to the country.

REFERENCES
Books and Journals
Iossa, E. and Martimort, D., 2015. The simple microeconomics of public‐private partnerships.
Journal of Public Economic Theory. 17(1). pp.4-48.
Gómez-Baggethun, E., and et. al., 2010. The history of ecosystem services in economic theory
and practice: from early notions to markets and payment schemes. Ecological
economics. 69(6). pp.1209-1218.
Einav, L. and Levin, J., 2014. The data revolution and economic analysis. Innovation Policy and
the Economy. 14(1). pp.1-24.
Safarzyńska, K., 2013. Evolutionary-economic policies for sustainable consumption. Ecological
Economics. 90. pp.187-195.
Flanagan, K., Uyarra, E. and Laranja, M., 2011. Reconceptualising the ‘policy mix’for
innovation. Research policy. 40(5). pp.702-713.
Forrester, J.W., 2013. Economic theory for the new millennium. 2003. System Dynamics
Review. 29(1). pp.26-41.
Kamada, Y. and Kojima, F., 2014. Voter preferences, polarization, and electoral policies.
American Economic Journal: Microeconomics. 6(4). pp.203-236.
Osteen, C.D. and Fernandez‐Cornejo, J., 2013. Economic and policy issues of US agricultural
pesticide use trends. Pest management science. 69(9). pp.1001-1025.