Economics for Business: Australian Economic Health and Policies

This report provides an analysis of the Australian economy, focusing on macroeconomic variables such as GDP, inflation, and unemployment to assess its stability. It examines the concept of stable economic equilibrium and uses GDP growth rate data to evaluate the economy's performance, highlighting fluctuations and deviations from the desired 2-3% growth. The report further explores the reasons for government intervention in production and income distribution, emphasizing market failure and the need for equitable wealth distribution. It critically assesses the health of the Australian economy, noting its strong performance in exports and labor productivity, while also addressing the high unemployment rate and moderate inflation. The report concludes with policy recommendations, suggesting increased financial resources for companies to boost production and employment, and adjustments to interest rates to control inflation, aiming to achieve economic stability.

ECONOMICS FOR
BUSINESS

TABLE OF CONTENTS
PART 1: INTRODUCTION............................................................................................................1
PART 2: ANALYSIS .....................................................................................................................1
Concept of stable economic equilibrium................................................................................1
About the stability of Australian economy.............................................................................2
Reasons in order to intervene government in production and income distribution................3
Critically analysing health of Australian economy................................................................4
PART 3: CONCLUSION ...............................................................................................................4
REFERENCES ...............................................................................................................................6

PART 1: INTRODUCTION
A study under which manufacturing of goods and services, level of consumption,
transferring wealth etc. is included, known as the economics. There is basically micro and macro
two branches involved in the economics. The present study focuses on the macro economics
variables and concepts. After considering macro economic elements like GDP, interest rate,
inflation, unemployment etc. rates stability of Australian economy is analysed in an appropriate
manner. Along with this, the project shows that why intervention of government is highly
important in the production and distribution of wealth. Beside this, health or macroeconomic
performance of the selected economy is assessed on the basis of different variables. Further, key
purpose of the present research is assessing economic condition of Australia and provide
supportive policies.
PART 2: ANALYSIS
Concept of stable economic equilibrium
A situation of a country at which it grows gradually and fairly changes from the last year
is known as the stable economic equilibrium. This particular situation depends on basically two
factors like demand and supply of goods and services. When level of these both the aspects are
equal in each and every year then stable equilibrium point is considered. If one aspect is lower or
higher than another then affects to the whole economic growth either in negative or positive
direction (Ponnusamy, 2017). Concept of this particular condition is shown through below stated
graph:
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In the above stated diagram quantity and price of goods or services shown on X and Y
axis respectively. A point where demand and supply both curves intersecting in the above graph
is E where economy is at the equilibrium situation. Apart from this, when demand is low and
supply is high then price shifts towards upward. Therefore, condition of surplus comes into
existence within economy which reflected between AB point. On the other side, deficit or
shortage is shown on CE1 area where quantity demanded is high and supplied is low in the
country.
About the stability of Australian economy
In order to analyse stability of an economy different aspects are considered by the
researcher and one of the best among them is Gross Domestic Product Rate (GDP). A monetary
value of overall products and services which are manufactured within boundary of nation and
one year is known as the GDP. Due to this particular situation it is undertaken for assessing
performance of the economy.
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Illustration 1: Australian GDP Growth Rate
(Source: Australian GDP Growth Rate, 2017)
On the basis of the above mentioned graph of GDP rate it can be measured that, within
every quarter it fluctuates with positive or negative changes. According to the GDP standards it
must be between 2-3% and Australian economy not reaches up to this position in any quarter
within last three years (Australian GDP Growth Rate, 2017). Therefore, it can be said that
economy of Australia is not stable and situation of deficit and surplus arisen.
Reasons in order to intervene government in production and income distribution
A condition in which government of the country interfere for making some changes
within economy is considered as the government intervention. There are two ways through
which it comes into existence in the country which are like monetary and fiscal policies. Further,
some specifics causes due to which government takes step to intervene in distributing incomes
and producing products and services which are stated below:
 In order to resolve issues of the market failure in the economy intervention of
government is highly important.
 Another cause for government interference in production of goods and services and
income distribution is to meet equal distribution of the wealth on overall economy. On
the basis of this, economy comes at the growing condition (Pettinger, 2017).
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 In order to enhance level of total production in the economy along with exports the
government intervention is significant.
 Further, in order to diminish marginal return generate within country into incomes the
government intervention is important.
Critically analysing health of Australian economy
Australia is the wealthiest nation in the Asia Pacific and expanded its economy more than
last two decades. Basic source in order to export goods and services of this economy was mining
as well as agricultural. As of now also these both the sources are remained constant and
contributing highest in the GDP. Real Gross Domestic Product was enhanced at the end of
March quarter with 0.8% which is the highest as compared to last 25 years. Likewise, the
nominal GDP is also grown with the better rate. When looking at the level of export growth rate
then it is also better in the world. Apart from this, productivity of labour growing with the
attractive rate in the Australian economy which reflects that health of this country is better (Six
facts that show the health of Australia's economy, 2017). Therefore, it can be observed that
Australian economy is at the growing and better condition.
However, unemployment rate of the selected country is 5.6% in the present times which
is high. Inflation rate is one of the important variable for an economy which must be lower and
this rate is at the moderate condition with reference to Australian economy. It can be advised on
the basis of this situation that, government should provide more financial resources to the
companies. Due to this, they will able to increase production level and for that firms will hire
workers. Henceforth, unemployment rate will go down and situation of economic stability come.
Along with this, it should enhance interest rate in order to decline flow of money. Therefore,
inflation rate comes into control in the Australian economy.
PART 3: CONCLUSION
It can be summarised from the above analysis that, Australian economic situation is not
stable from the last three years. The reason is that, it fluctuates with major changes in every
quarter from the two years. Apart from this, the government intervenes in the economy with the
help of basically two concepts which are such as fiscal and monetary. In order to eliminate issue
of market failure and enhance performance of economy, intervention of government in goods
and services manufacturing as well as income distribution is required. Further, Australian
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economic health is at the moderate condition where the government should consider some
policies.
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REFERENCES
Australian GDP Growth Rate, 2017. [Online]. Available through:
<https://tradingeconomics.com/australia/gdp-growth> [Accessed on 23rd September 2017].
Pettinger, T., 2017. Should the government intervene in the economy?. [Online]. Available
through: <https://www.economicshelp.org/blog/5735/economics/should-the-government-
intervene-in-the-economy/?> [Accessed on 23rd September 2017].
Ponnusamy, S., 2017. Stable and Unstable Equilibrium. [Online]. Available through:
<https://owlcation.com/social-sciences/Stable-and-Unstable-Equilibrium> [Accessed on
23rd September 2017].
Six facts that show the health of Australia's economy, 2017. [Online]. Available through:
<https://www.theguardian.com/business/grogonomics/2014/jun/05/six-facts-that-show-the-
health-of-australias-economy> [Accessed on 23rd September 2017].
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