Economics Assignment 1: Analysis of GDP, Market Economy, and Trade

This economics assignment delves into three key areas: the Gross Domestic Product (GDP), the Keynesian view of market stability, and international trade. The assignment begins with a definition of GDP, explaining its measurement and highlighting inherent problems with using it as a measure of well-being, including its failure to account for leisure, environmental costs, and unequal distribution of wealth. It then uses the Human Development Index (HDI) to compare trends between Australia and France, illustrating the limitations of GDP. The second part examines the Keynesian perspective on market economy stability, contrasting it with alternative views and evaluating its realism. The analysis includes Keynes's arguments for government intervention, counter-cyclical demand management, and the potential pitfalls of mishandled policies. Finally, the assignment explores international trade, defining comparative advantage and discussing whether free trade benefits all countries. It outlines various benefits of free trade, such as increased economic growth, a more dynamic business climate, lower government spending, foreign direct investment, and technology transfer, concluding that free trade generally benefits all participating countries. The student's work is provided to Desklib to help other students.

Assignment 1
ASSIGNMENT
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Assignment 2
1. Define the GDP. Briefly explain how it is measured. Where are the inherent problems
with this measure of wellbeing? Use data on the Human Development Index(HDI) to
access trends between Australia and any other country of your choice.
GDP is the Gross Domestic Product and it is the vast nation’s measure of an ordinary monetary
activity that’s the economic activity(Henderson, Storeygard and Weil 2012, p.994). It is the
financial price of the manufactured goods and services made and delivered within a certain
nation in a given period of time.
It is measured quarterly (quarter by quarter) in regards to the estimates given every month; this is
because putting all the economic output of a given state or nation is hard hence monthly
estimates are released and revised as more accurate data is sourced by the Bureau of Economic
Analysis (Connolly, and Lewis, 2010, p.1). Additionally, there is a reference for the past three
years’ worth of data so as to get the correct annual revisions.
Some issues arise from the use of GDP to measure the wellbeing of a country or a nation and
they are all explained as follows;
Doesn’t make room for leisure time. For example, where two economies with equal
requirements, but in a single financial system the working hours is 12 while for the other one is
8.
It counts " the negatives " as well as "the positives." An example where earthquake occurs and a
nation calls for rebuilding, GDP will increase. Money used to treat the sick counts also, it
increases too.
No count of unequally distributed goods and services. For instance, two economies inequality,
what is produced 90% goes to the rich and the rulers, and the local citizens get the remaining

Assignment 3
10% or none. Distribution on the other one is significantly equal. Each case, GDP per capita will
have no difference, however, there are economic indifferences clearly.
GDP handiest counts items come in through official and legal marketing, so no capturing
domestic manufacturing and back door items from the black market. Mainly in growing nations
wherein, a great deal of what is consumed is produced at domestic.
Doesn’t capture the pollutants charges: Comparison between economies with identical GDP per
capita, where one of them has polluted the air and water contrary to the alternative; in this case,
well-being measure will be exceptional.
1 9 8 5 1 9 9 0 1 9 9 5 2 0 0 0 2 0 0 5 2 0 1 0 2 0 1 5 2 0 2 0
0
5000
10000
15000
20000
25000
30000
35000
40000
45000
50000
Australia
Linear (Australia)
France
Linear (France)
year
GDp per capita
A graph of GDP per capita growth against the year between France and Australia since 1990 to
2017
2. Explain the Keynesian view of the stability of the market economy. How realistic is this
view?
There are two polar views approximately about the market economy stability and they include;
Firstly, the sort of system is really stable, whereby the market forces are directing the economic
system sharply towards a clean increase direction (Farmer et al 2012, p.295). Secondly, there is

Assignment 4
the view that it is risky and unstable, and there will be intervals of high-priced booms and busts,
due to preexisting high rate of unemployment.
According to the Keynesian view on the market economy it is that; he believes that aggressive
government movement to stabilize the economy is primarily based on price opinions and at the
ideals that macroeconomic fluctuations notably lessen monetary well-being or economic well-
being and the authorities are informed and successful sufficient to improve on the free market
(Skidelsky 2010, p.1). This view is inherently stable and it directs the economic system to a
clean grow path.
Behind his theory, it was realistic that his views were Keynes’ contribution changed into to
expose the interaction among labor markets and the countrywide economic system, and no
longer treat the labor marketplace in isolation. Supply-facet economists agree the government
has a function to play, however, economic policy should target corporations.
According to Keynesian the aggregate demand is highly influenced by the way the choices of a
financial system behaves occasionally unevenly (Lavoie 2014). He also believed that there is no
need for aggregate demand of which it wasn’t true because it was an important classical
assumption which stated that supply always created demand.
The authorities should consider counter-cyclical offer on-demand management; He was critical
of the United Kingdom finances, clinic workers were cut their wages, and infrastructure fund
reduced. He based his arguments on how it would put pressure and depress further by making the
recession much worse. He encouraged more government expenditure financed by higher
borrowing. This was misapplied and it led to great debts and hence it never came to pass as a
reality hence it was more of mishandled.

Assignment 5
These models are based totally on the idea that a decentralized economic system is a strong
machine and that market forces, they no longer generally tend to supply boom and busts.
Graph 2
Source: ABS; RBA(www.economicshelp.org/)
3. International trade is determined on the basis of comparative advantage. Discuss. Does
free trade benefit all the countries?
This is defined as a monetary time period that refers to a financial system's potential to provide
items and services on a decreased opportunity price than that of exchange

Assignment 6
companions(Woodford, 2011). It offers a corporation the potential to promote goods or services
at a lower price eliminating competition and recognize strongholds of income borders.
International trade is determined through this kind of basis because a certain country produces a
good or service for a lower possible price than other international locations. Opportunity value
measures an exchange-off or trade-off. A state with a comparative gain makes the trade-off
really worth it (Cuñat and Melitz 2012, p.225). The advantages of purchasing their goods
outweigh the negative aspects. The nation or state may not be satisfactory at producing
something, but the good has a low opportunity value for other countries to import.
Free trade has its benefits on all the countries involved which include the following;
Increased Economic Growth: Developing nations can greatly from free alternate via increasing
their quantity of production or get admission to economic resources.
More Dynamic Business Climate: Often, corporations had been included before the agreement.
The neighborhood industries feared to turn into non-aggressive and stagnant in the worldwide
marketplace. This protection eliminated, they are able to compete internationally.
Lower Government Spending: Many governing authorities subsidize neighborhood enterprise
parts which after the alternate settlement undoes subsidies, the price range might be useful in a
better way.
Foreign Direct Investment: Investors flock to different nations without limitations. This provides
capital to enlarge neighborhood industries and enhance domestic corporations.
Expertise: Global organizations have greater know-how than domestic agencies to broaden local
resources. That's in particular proper in mining, oil drilling, and production. Free change
agreements allow worldwide firms to get entry to these business opportunities.

Assignment 7
Technology transfer: Local companies additionally gain access to multination new technologies.
When the nearby country economy grows the development possibilities also grow. Inter-country
wide corporations educate the nearby personnel.
Improvement of the inter-nation relations: Developing nations vulnerable to international threats
on development and technology advancement. Development of strategic free exchange members
of the family with greater effective threat protection worldwide.
https://www.google.com/url?%www.economicsdiscussion.net

Assignment 8
References
Connolly, E. and Lewis, C., 2010. Structural change in the Australian economy. RBA Bulletin,
September, pp.1-9.
Cuñat, A. and Melitz, M.J., 2012. Volatility, labor market flexibility, and the pattern of
comparative advantage. Journal of the European Economic Association, 10(2), pp.225-254.
Farmer, J.D., Gallegati, M., Hommes, C., Kirman, A., Ormerod, P., Cincotti, S., Sanchez, A. and
Helbing, D., 2012. A complex systems approach to constructing better models for managing
financial markets and the economy. The European Physical Journal Special Topics, 214(1),
pp.295-324.
Henderson, J.V., Storeygard, A. and Weil, D.N., 2012. Measuring economic growth from outer
space. American economic review, 102(2), pp.994-1028.
Lavoie, M., 2014. Post-Keynesian economics: new foundations. Edward Elgar Publishing.
Skidelsky, R., 2010. The relevance of Keynes. Cambridge Journal of Economics, 35(1), pp.1-13.
Woodford, M., 2011. Interest and prices: Foundations of a theory of monetary policy. Princeton
university press.