Australian Economy Analysis

The assignment delves into the successful Australian economy over recent decades. It highlights factors like strong macroeconomic policies, a booming commodity sector, and structural reforms that have contributed to high living standards and economic stability. However, it also acknowledges challenges such as gender gaps, greenhouse gas emissions, and an aging population.

Running head: STATE OF AUSTRALIAN ECONOMY 1
State of Australian Economy
Name
Institution

STATE OF AUSTRALIAN ECONOMY 2
STATE OF AUSTRALIAN ECONOMY
Introduction
The economic analysis below seeks to understand the health of Australian economy and
the need for Australian government intervention by using economic principles and theory. A
diagram will be used in the explanation if the concept of a stable economic equilibrium based on
the assessment of whether or not the economy of Australia is presently at a stable equilibrium.
The phrase ‘equilibrium’ is drawn from 2 Latin words called “acqui” and “libra”. Acqui implies
equal while libra means to balance. Therefore, equilibrium implies ‘equal balance’. The
equilibrium has been applied vitally in economics hence the equilibrium economics. Equilibrium
in economics explains a state at which two opposite forces cannot influence each other. Simply
put, equilibrium is a position whereby no further change is feasible. Three types of equilibrium
include stable, neutral and unstable equilibrium.
Concept of Stable Equilibrium
We deal with stable equilibrium which can simply be understood by having a ball resting
at the bottom of a bowl. The ball is comfort at the bowl’s base and remains in stable equilibrium
and any disturbance still leaves this ball at its original position. The figure below illustrates a
stable equilibrium:

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In the above figure, DD denotes a negatively slopped demand curve and SS represents a
positively demand curve. The equilibrium takes place at point E. At this juncture, the demand
and supply remain in balance; the equilibrium quantity and price OQ; OP are determined
respectively. This is a typical instance of stable equilibrium in economics. What takes place at
price above level of equilibrium?
Assuming that market price is OP1. At such a price, P1B is quantity supplied whereas the
quantity demand is solely P1A. Therefore, quantity supplied remains more than quantity
demanded. The surplus quantity in market is to extent of AB. This establishes a downward
pressure on price (Plumb, Kent & Bishop, 2013). The downward pressure will apply till price
hits equilibrium level at which supplied quantity equals demanded quantity. What happens at
prices beneath equilibrium level?
In the above figure, let us assume the price OP2. At this level of price, supplied quantity
is less than demanded quantity. CE1 represents volume of commodity shortage. As a result of
excess demand, an upward pressure on price is applied. Such a pressure pushes up price to
equilibrium level that supplied quantity equals demanded quantity.

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Health of Australian Economy
Australian economy has enjoyed unprecedented GDP growth since 1991 December. The
economy has avoided both the Asian financial crisis (1998) and global financial crisis (2008)
without a recession. Contrasted to many other OECD economies who have suffered rises in
unemployment and long-run unemployment since then, Australia has persistently powered ahead
(Turgeon & Simeon, 2015). It remains true that as the GFC hit and tax revenue dropped,
Australia ushered in a series of stimulus measures for tackling crisis which moved its economy
to deficits in budget from surplus budget. The rating agencies have provided Australia with a
triple AAA rating for what they are worth. This implies that they are never concerned about
Australian budget deficits or debt.
The economy of Australia has slowed down as the boom on commodity come to the end,
however, Australia has not gone into the recession. The economy is certainly not in the crisis.
The Australian economy has had the stellar performance on the basis of OECD. On the basis of
macroeconomic indicators such as GDP, inflation, debt, current account balance, unemployment,
Australia has compared favorably. The GDP of Australia has been consistently growing, and the
rate of unemployment has been lower consistently contrasted to many other OECD countries
since the global financial crisis.
The economy enjoys the lowest debt according to Gross Financial Liabilities measures in
OECD. In the year 2013, the Debt to GDP ratio of Australia stood at 34.40% and the OECD
average stood at 112%. Debt crisis?

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Whereas other OECD are increasingly concerened with deflation, Australia has managed
to go via crisis with negligible inflation. The economy has had current account deficit (CAD) for
over a 100 yeears with an exception for each brief spells of surplus. Nevertheless, since GFC,
solely Italy and Germany had had lower CADs. It has been argued by Coaliation government in
the year 2014 that Australian economy stands in dire straits and is heading to collapse due to
enormous budget deficits alongside a ballonning governmet debt (Reid & Botterill, 2013). This
is threatening to slice welfare, education, health alongside public service. Such mirror austerity
measures which have been unable to get most OECD economies back to growth. The
government simultenously wanted to abolish mining tax and carbon tax to hit poor and assist rich
in 2014.
Is Australia Economy Stable/Unstable

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The Australian economy is developed and remains one of enormous mixed market
economies globally with about 1.690 trillion Australian dollars. The economy recorded the
lengthiest undisturbed growth in GDP run in developed economies with 2017 March financial
quarter. It can be categoricaly stated that Australian economy is a huge, stable and diverse one
and even set to continued expansion via its strong trade links to various diverse makets (Downes,
Hanslow & Tulip, 2014). The economy has demonstrated economic adaptability, resilience, as
welll as record of stable and steady economic growth thereby providing a safe and low-risk
environmnet that favor busieness.
Australian economy is in its twenty-sixth year of consecutuve yearly growth in economy,
its economy is underpined by strong insttutions, an extradordinary service sector as well as an
ability to efective global changes response. The economy remains the thirteenth global largest
and rated AAA by each of the 3 international rating agencies. The economy forecast to realizing
averagae yearly real GDP growth of 2.90% over the coming 5 years-the highest among main
advanced economies (Bean, McAllister, Pietsch & Gibson, 2014). The economy is characterized
by high levels of productivity, with fiteen out of twenty industiries rating beyomd global
averages.
Conclusion
The economy of Australia has enjoyed substantial success in the latest decades. This is a
manifestation of a strong macroecomic policy, long boom in commodity, and structural reform.
The standards of living alongside wellbeing in Australia remain high in general, though certain
challenges are inevitabilities with respect to gender gaps and emission of greenhouse gase, as
well as challenges emerging from ageing population. Nonetheless, Australia economy remains a
classical case of stable equilibrium.

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References
Bean, C., McAllister, I., Pietsch, J., & Gibson, R. K. (2014). Australian election study, 2013.
Computer file]. Canberra: Australian Data Archive.
Downes, P. M., Hanslow, K., & Tulip, P. (2014). The effect of the mining boom on the
Australian economy.
Plumb, M., Kent, C., & Bishop, J. (2013). Implications for the Australian economy of strong
growth in Asia. Reserve Bank of Australia.
Reid, R., & Botterill, L. C. (2013). The multiple meanings of ‘resilience’: An overview of the
literature. Australian Journal of Public Administration, 72(1), 31-40.
Turgeon, L., & Simeon, R. (2015). Ideology, Political Economy and Federalism: The Welfare
State and the Evolution of the Australian and Canadian Federations. Understanding
Federalism and Federation, 125.