Running head: STABLE EQUILIBRIUM IN THE ECONOMYSTABLE EQUILIBRIUM IN THE ECONOMYName of the StudentName of the UniversityAuthors Note
1STABLE EQUILIBRIUM IN THE ECONOMYTable of ContentsIntroduction......................................................................................................................................2Stable economic equilibrium...........................................................................................................2Instrument adopted by the Australian government for stabilization...............................................6Conclusion.......................................................................................................................................7References........................................................................................................................................8
2STABLE EQUILIBRIUM IN THE ECONOMYIntroductionThe purpose of this assignment is to elucidate on the concept of stable economicequilibrium. Stable equilibrium refers to the condition when any deviation from equilibriumautomatically brings back to the initial equilibrium position. Free market equilibrium occurswhen demand as well supply condition in market becomes equivalent. In this study, stableequilibrium is analyzed with the help of microeconomic as well as macroeconomic stability. Inaddition, stabilization in the Australian economy is assessed in the current period. The necessityof government intervention for stabilizing the economy is also explained in this study.Stable economic equilibriumMarket equilibrium is a common example of stable economic equilibrium. The figurebelow explains market equilibrium. Now, market equilibrium occurs at the point when thedemand curve (DD) meets the supply curve (SS), which is reflected by E. The equilibrium price(Pe) as well as the equilibrium quantity (Qe) is attained corresponding to this equilibrium point.Now, if change in price of the products creates movement from initial equilibrium point whichin turn restores equilibrium without any external intervention, then this point is referred to asstable market equilibrium.
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