Economic Assignment Report - GDP, Business Cycle, Thailand

This economics assignment analyzes Gross Domestic Product (GDP) as a measure of economic well-being, discussing its limitations and the need for supplementary indicators like household income and consumption. It further explores the business cycle, its phases (recession, recovery, growth, and decline), and the impact of a stock market crash, highlighting how crashes can disrupt the cycle and influence investment. The assignment also examines the economic relations between Australia and Thailand, detailing both positive impacts such as increased trade and infrastructure development, and potential negative consequences like competing bilateral agreements. The report uses various sources to support its findings and includes a bibliography.

Economic Assignment 1
Economic Assignment
Name:
Course Name:
College:
Tutor:
Date:

Economic Assignment 2
Economic Assignment
Question 1
GDP as A Measure of Economic Well-Being
Gross domestic product (GDP) is viewed as a quality estimate of the whole economy at a
particular period of time. It measures the eventual output of an economy by adding investment,
total consumption, net exports and government expenditure. By dividing the GDP of a country
with the total population of the country we obtain per capita income which is essentially used to
gauge the standards of living of the populace. Income is however not the only determinant of
well-being as postulated by many scholars and economists leading to the proposal of other
metrics to determine the standards of living. GDP on its own is therefore not conclusive in
determining the standards of living of the populace.
The quality of life is a wide concept that that entails a variety of entities. It includes
health, work status, living conditions and the subjective perception an individual has of such
factors. The gross domestic product has been used for a long time as a measure of the economic
activity of a region or country and many policy makers use it as a benchmark on which to base
their decisions. Due to this purpose the GDP has been widely used to qualify the well-being of
individuals. GDP is however not sufficient a parameter and has to be supplemented by the
following indicators. Individuals’ material living standards are better monitored by using
measures of household income and consumption. In the report they argue that the income of the
country’s citizens is a more efficient method in measuring their well-being than the domestic
production.

Economic Assignment 3
Some parameters affect the well-being of life positively while others affect the quality of
well-being negatively. A secure environment impacts a citizen’s well-being positively. This is
because the citizen will be more productive in a secure environment than in an insecure
surrounding thus increasing the well-being of the citizen. This should be factored in determining
the well-being of individuals in alternative methods that include other happiness parameters like
leisure and level of education and health alongside the GDP.
Question 2
Business cycle and its impact of a stock market crash on the business cycle
The business cycle is a systematic, irregular upward and downward movement in
economic activity measured by changes in various macroeconomic variables and the gross
domestic product (GDP). A business cycle is always defined by four bust and boom phases.
These include recession, recovery, growth and decline. These phases repeat themselves over
time. The stock market crash is an unexpected instantaneous drop in stock prices eventually
bringing about a major loss of paper wealth. A stock market crash could have adverse effects on
the business cycle thus making the business cycle phases unpredictable and irregular.
The business cycle is primarily associated with significant business trends while some
analysts use the business cycle to study and understand changes in business. The business cycle
is the most common indicator that investors consider when assessing whether to enter or exit the
market and at what particular event of the cycle. Stock market crashes are thought to be caused
by a continued period of increasing stock prices and extra economic positivism
With more money in the stock market the stock prices tend to rise significantly. The
business cycle plays a role in determining when an investor or a new player enters the market

Economic Assignment 4
depending on the potential of such a decision to make a loss or a profit. Inflation is as a direct
result of the phases of the business cycle. Inflation sets in during or after the boom and affects
the stock market majorly. A stock market crash brings about an increase in the interest rates
which may lead to slowing economic growth. This affects the typical businesses bringing about
low profits, lower sales and lower revenues. This eventually destabilizes the business cycle and
could bring about irregular phases of market boom and bust.
The stock market crash has a considerable effect on investment portfolio. The stock
market crash affects stock market cycles for instance the duration of the bull and bear markets.
The bull and bear markets are directly related to the business cycle phases and a change in their
occurrence equals a change in the business cycle.
Question 3
Australia – Thailand Economic Relations
Australia’s economic relations with Thailand have led to both positive as well as negative
impacts on the welfare of Thailand as a whole. In particular, Thailand as a nation remains a very
important partner to Australia. In essence, as a trading partner, Australia has contributed to a
number of impacts, both negative and positive, to the economic growth and welfare of the
Thailand nation over the decades. The total two-way trade between the two nations between the
years 1996 through 1997 was approximately 2.76 billion dollars, which was an increase from
only 508 million dollars in the period 1986-87.
The services trade as well as investment levels among these two nations have
significantly remained low, though it has been increasing over the years. These relations could be
both beneficial and harmful based on the relative magnitudes of trade creation as well as

Economic Assignment 5
diversion between Australia and Thailand. One of the positive impacts resulting from these
relations on the part of Thailand is that it has led to increased bilateral merchandise trade
between the two nations. As a result, this has resulted in modest trade development, without any
detected diversions effects.
Another positive impact resulting from the relations on Thailand increased infrastructure
in the nation of Thailand, particularly in terms of power, environmental management, as well as
telecommunications. For instance, the rural parts of Thailand posses a range of infrastructural as
well as industrial growth needs. In addition, social infrastructure including transport links for
roads and railways and airports have been greatly developed. Besides, healthy services and
education has also improved in Thailand over the time.
Other important positive impacts include increase in the level of tourism from Australia,
which has contributed to the increased construction as well as management of tourism facilities
in Thailand, with a major increase in the area of eco-tourism. Technology transfer from Australia
to Thailand has also been another important area. Because of increased transfer of technology for
instance, Thailand has experienced higher value-added manufacturing in addition to technology-
based industries such as software use.
However, one of the negative impacts that Thailand has experienced from the economic
relations between itself and Australia include triggering of competing bilateral agreements,
which has significantly whittled away the advantages that the cooperation confers

Economic Assignment 6
Bibliography
Bolten S 2000, Stock market cycles: a practical explanation, Westport, Conn, Quorum Books.
http://site.ebrary.com/id/10017887.
Clark A & Senik C 2015, Happiness and economic growth, Lessons from developing countries.
Corby, Oxford University Press.
Department of Foreign Affairs and Trade (DFAT) 2011a, ‘Thailand-Australia Free Trade
Agreement’. Available from: http://www.dfat.gov.au/fta/tafta/index.html.
Kassenboehmer S & Schmidt C 2011, Beyond GDP and back: what is the value-added by
additional components of welfare measurement? London, Centre for Economic Policy
Research.
HacioğLu U & DinçEr H 2017, Global financial crisis and its ramifications on capital markets:
opportunities and threats in volatile economic conditions.
Meier GM & Stiglitz, JM 2001, Frontiers of Development Economics: The Future in
Perspective, New York: Oxford University Press.
Stiglitz J, Sen A & Fitoussi J 2009, Report by the commission on the measurement of economic
performance and social progress, Paris: Commission on the measurement of economic
performance and social progress.