Economic Analysis Report: Price, Demand, and Recession

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Contents
Introduction......................................................................................................................................3
1)......................................................................................................................................................4
2.......................................................................................................................................................6
3.......................................................................................................................................................7
4)......................................................................................................................................................9
Conclusion:....................................................................................................................................10
References:....................................................................................................................................11
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Introduction
In the following, the overall is based on the price and demanded and the period of economy how
it will contribute or effect the country economy. In order to understands each term of economy
like recession, depression and quantity demand and supplied, all are cover in the below that help
in gaining the knowledge and able to answer clear.
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1)
a)
Dollar is always worth a dollar, it means the value of dollar not change in terms so dollar. Value
of dollar is always same but in case of economy it can be said dollar lost its value due to many
reason one of them is recession. Value is less is taken or considered into the account on the
following reasons.
The value or worth of dollar is decrease due to the excessive use of dollar because of central
bank of the concerned country make or create more money and such money flow in the market in
excessive quantity then in such situation the value of the worth of dollar is deceased drastically
(Brunnermeier, and Sannikov, 2016).
For example, if the bank start to make more money and in this situation money van be easily
taken. So in this condition the value of dollar is less and it encourages to the people to take loan
and will make a bad impact on the country economy.
b)
Nominal rate of interest:
This rate is that rate of interest which is taken before the inflation considered into the account.
This is the interest rate quoted on loans and bonds (government security). This is the simple way
or concept of interest in order to understand the basic. It help in finding the actual amount or
price by the borrowers to the person of lenders from whom loan taken for the purpose of use
their money in their business or personal work. Central banks have the responsibility to set up
the short-term nominal interest. This rate can be treated as the basis or base rate that should be
charged by the other bank or any other financial institutions. If the rate of nominal is less or
minimum or low then it not good for the country economy as it encourage to the people to take
or borrow more capital on debt and increase their spending amount. For example, if the rate of
interest for nominal is 10 percent then the borrowers of the capital is expected to pay $ 10 for
every loan amount $ 100.
Real rate of interest:
The real rate of interest is that rate of interest that is used to by the person in order to remove the
effects of inflation for the purpose of showing the real cost of capital in front of borrower so that
he or she can take a loan as per their suitability. In simple or other words, it can be defined as the
rate of interest which not considered the inflation into the account. In order to calculate real
interest rate, firstly need to calculate nominal interest rate (Laubach, and Williams, 2016).
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From the above discussion of both interest rates, it can be said that real interest rate is more
relevant or more important than nominal interest rate because of it remove the inflation effect on
the money and able to show the real cost for the borrowers.
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a)
Recession:
It can be defines as a decline in the activity of economic. A recession is that period of time which
goes continue for two continuing quarters or it can say continue for the last six months. This type
of recession is mostly seen in production, real-income, employment and many others. In the
words of technically, recession is a period of time which is continued for the two consecutive
quarters (6 months). In the recession period it was seen a growth but in negative and this is
measured by the GDP (gross domestic product).
Depression:
It is just opposite of recession it means it an expensed part of recession. A depression is also a
period but in downwards for several years or it can say it is in economic for more than years.
This (depression) is harder as compared with recession. This will show a decline in terms of
employment rate and income of the people (Mann, et. al., 2016).
Following are the reasons/observations that the people call an economic depression instead
of recession:
1. Due to the effect in economic for long term say many years.
2. Effects employment as well as real income of the people and also country over a long
time.
b)
People who lived in the great depression period have their own high thinking over the saving as
compared worth the people who only remembered the recent change in the development of
economic. The reason being that people lived in great depression had faced ta situation of
depression from many years which convey a message to those people to save more for the future
due to this period is going to be long and in that period there is less employment and this will
ultimately decrease the income of people. The other people who only remember expansion of
economic only remember such things instead of depression period because they were not seen or
face such situation or condition that in great depression period how people lived without having
enough income in order to fulfill their basic needs.
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3
a)
Here the demand for the product is 12300 – 240p which is taken as an equation first
And the supply of the product (Vans) is 6700 + 60p is considered as an equation number second.
So from both equation, first of all make supply equation which is numbered second is equal to
equation first by multiply four. After that the new equation is obtained is:
26800 + 240p
Now start to compare both equation and calculate the price which is based on equilibrium and
the quantity produced.
First of considered both equation (new equation which is obtained after multiplying) and the
second one which numbered as equation first.
Demand = 26,800 +240P
Demand =12300 – 240P
Demand = 14,500
So from the equation solved,
Equilibrium price is $ 18.67
Production of vans (quantity) 7820
b)
As per the information given for 20 units for the price, this price is put into the equation in both
equations one-by-one.
26800 + 240P
Where price is 20
So the supply is,
26800 + 240 (20)
31,600
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Now calculate quantities demanded
Put 20 in equation
12300 – 240P
12300 – 240 (20)
7500
So from the solve equation it get a supply of 31,600 units and quantities demanded is 7500.
From the solving equation it is clear that the imports support and it is opposes by an exports due
to following reasons:
For an exporters,
 It will increase its profitability.
 Enable to cover outside the country area.
 Make its financial strength strong.
 Hold a capacity to influence the demand.
For an importers,
 Reduce its profitability.
 Minimize their power in order to control market demand.
 Price fluctuates (Menzio, and Trachter, 2018).
c)
There is a direct effect in the supply and quantity demanded for the product due to impose of
tariff. The effects on supply and demand are followings:
For domestic demanded,
If the tariff is impose on domestic demand then the demand for the product say Van is decline
due to expensive.
In case of domestic supply, tariff made an impact on supply as the tax imposes will create a
burden on the manufacture and ultimately it will be bear by consumer who use it. So it is
concluded that imposed of tariff on supply not made an impact on supplier but it effect the
demanded for the product.
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4)
There are four different types of unemployment which is going to be discussed below in detail
for the purpose of clear and better understanding with each type of unemployment.
1. Frictional unemployment:
This type of unemployment occurs when people are having two choice of facing two situations
like people in between jobs or finding for the first time job. This type of unemployment is occur
when the economic taking a step in order to match in correct order between job and people. This
situation is arise when a person left the job or looking job for the very first time then this
situation is called frictional unemployment (Ezzy, 2017).
2. Seasonal unemployment:
This type of unemployment is occurring when the people get job only on occasionally or a
particular season. The other part or that situation when the people are not in working such
situation is called seasonal unemployment. I this, people occur jobs for a particular time or
season time. Example like agriculture and construction work as the crops are ready to cut and
construction work is finished then such employment is over and after wards people are
unemployed.
3. Structural unemployment:
This type of situation is occurred in a condition when the skills of people are not needed in long
term by the economy. This situation is occurring due to the advancement of technology or any
other structural changes in the line of production. Example of this, when automobiles came into
the market, those people who are worked with horse are totally structural unemployment.
4. Cyclical unemployment:
In this type of unemployment people have no work or can be said as out of work due to less
economic growth or slow growth and the reason is that there is no demand in the market for the
product or services that in which worker engaged. This type of unemployment situation is said to
be worst situation in any economy and mainly this type is can be seen in the period of recession.
The trend follow in the labour market in Australia is higher by with the monthly job growth is
seen by 44000 in contradiction of prediction increase of 18000. This is that labour trend in
market of Australia is high which make no impact on the unemployment rate (Hawthorne, 2016).
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Conclusion:
In the light of dollar price, recession and depression period, equilibrium price and demanded and
the trend follow in Australian labour market, it has been concluded that dollar lost its value in
case of excess supply of money in the market and both recession and depression period are
different and it can be said that depression period is an extension of recession which continued
over long tem of years. It also concluded the impact of exports and imports on the supply and
demand of Van.
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References:
 Brunnermeier, M.K. and Sannikov, Y., 2016. The I theory of money (No. w22533). National
Bureau of Economic Research.
 Ezzy, D., 2017. Narrating unemployment. Routledge.
 Hawthorne, L., 2016. Labour market outcomes for migrant professionals: Canada and Australia
compared. Available at SSRN 2808943.
 Laubach, T. and Williams, J.C., 2016. Measuring the natural rate of interest redux. Business
Economics, 51(2), pp.57-67.
 Mann, T.E., Redistricting, C. and Mann, T.E., 2016. RECESSION AND DEPRESSION.
 Menzio, G. and Trachter, N., 2018. Equilibrium price dispersion across and within stores. Review
of Economic Dynamics, 28, pp.205-220.
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