Reflective Journal on Contemporary Economic Issues - WIN

This reflective journal analyzes several economics articles focusing on key economic issues. The first article discusses the slump in Australian coal prices due to declining export demand and the impact of the US-China trade war. The second article examines market competition in Australia, highlighting the dominance of a few companies and potential consumer welfare issues. The third article explores the Reserve Bank of Australia's (RBA) use of quantitative easing to combat the economic impact of Coronavirus. The fourth article discusses the fluctuations in the Australian dollar exchange rate and the factors influencing it. Finally, the fifth article delves into the phenomenon of toilet paper hoarding during the Coronavirus outbreak and its effects on supply and demand. The journal emphasizes the importance of understanding economic principles and their real-world implications.

Running head: REFLECTIVE JOURNAL
Reflective Journal
Name of the Student
Name of the University
Student ID

1REFLECTIVE JOURNAL
Table of Contents
Article 1...........................................................................................................................................2
Article 2...........................................................................................................................................3
Article 3...........................................................................................................................................4
Article 4...........................................................................................................................................5
Article 5...........................................................................................................................................6
Bibliography....................................................................................................................................8

2REFLECTIVE JOURNAL
Article 1
https://www.theguardian.com/environment/2019/dec/27/price-of-australian-thermal-coal-slumps-
to-lowest-in-more-than-a-decade
Reflective
The article speaks about the fall in coal price in Australia. The fall in price of coal in one
week time is drastic. The price fell from US$ 100.73 to US$ 66.20 in just one week. It is argued
in the article that this fall in price of coal is due to the continuous decline in the export demand.
The major importer of Australian cola is China but after the advent of the US and China trade
war China has put is focus on developing the local industry. In the process, the country is relying
on renewable source of energy. Export demand from European countries and the US has also
declined. The mining industry in Australia is providing continuous supply coal and causing
supply to exceed the demand and as a result, the price of coal falls. It can be observed in the
article that there is an estimated fall in revenue in the coal industry in Australia. As per the
estimation of the article the export revenue of coal will fall by the AUD 5.4 billion and it may
fall further in coming year. However, it is estimated in article that there will be growth in the
earning from coal in 2024. It said in the article that due to surge in demand from India the
demand will rise. However, there are threats to the business as there availability of renewable
source of energy that are cheaper than coal. Therefore, it can be said that demand and supply is
significant in a business to earn revenue (Inoua & Smith, 2020). The company should have
reduced eh supply of coal to match the demand or find new options to expand their business and
meet demand and supply to keep the price stable. Therefore, any business decision depends on
the drivers of demand and supply. It is necessary to closely monitor the drivers such that the

3REFLECTIVE JOURNAL
business do not need to face any sudden fall in revenue due to fall in price. Therefore, demand
analysis of a market to identify the possible prices and revenue. On the other hand, supply
analysis needs to be done to understand production factors of the product.
Article 2
https://www.theguardian.com/business/grogonomics/2017/dec/05/australian-consumers-need-
protecting-in-an-economy-dominated-by-so-few-players
Reflective
Market competition and market failure are two significant parts of market economy. The
welfare of consumers depend on the degree of market competition. The article speaks about the
welfare of consumers in Australia because in most of the necessary sectors there is not existence
of perfect competition. All of the sectors are dominated by few number of companies and thus
they have significant amount of market power. As per article, it is argued by many that even
though sectors are dominated by the few number of companies there is no lack of competition in
the sectors. On contrary, the market concentration in the sectors are increasing day by day
making it less competition with passage of time. The increasing market share of top companies
in the sector especially in the case of supermarket sector where Woolworths the leading company
has increased its market share significantly gaining monopoly power over the market and
eventually it will lead to gain of super normal profit for the company. It is further argued that
increase in market concentration and large amount of market share does not mean there exist
supernormal profit (Xu & Lee, 2019). In case of oligopoly and monopoly where the market
competition is very low and lowest respectively, the consumers are bound to get exploited and
the decision of consumers hardly matters in this case. Thus, to give consumers the chance of

4REFLECTIVE JOURNAL
bargain it is necessary to have competitive market such as perfect competition or monopolistic
competition. Markets with low competitiveness in many cases gives rise to market failure
causing adverse selection. In these markets the products are mostly unique, for example the
financial products in banking sector where the banks have the complete knowledge of the
products but the consumers do not have any kind of knowledge and this leads to adverse
selection. In case of market failure, it becomes very much difficult for the consumers to take any
decision. On the other hand, under highly competitive market producers face difficulty in
decision making as consumers have many option. Hence, the position of consumers and
producers in a market is at completely opposite directions.
Article 3
https://www.businessinsider.com.au/australia-qe-quantitative-easing-rba-first-time-2020-3
Reflective
Governments use different types of economic tools to develop economic policies to get
desired outcome from the economy. The article speaks of such an economic tool which is called
quantitative easing. Under quantitative easing, the central bank of a country buys out all the
government bonds and securities in the market to flush money in the economy to boost the
money supply (Rodnyansky & Darmouni, 2017). According to the article, Reserve Bank of
Australia (RBA) uses the quantitative easing tool for the first time in its economic history. The
outbreak of Coronavirus has impacted all the countries in the world and Australia is no
exception. It is expected that outbreak of the disease would impact the economy of the country
severely. Hence, to nullify the effect RBA is using the policy tool of quantitative easing. It
should be kept in mind that quantitative easing is nothing but another word for open market

5REFLECTIVE JOURNAL
operations. RBA is willing to flush out $1.13 trillion of money into the economy such that
individuals and business does not have shortage of money required for necessary purposes. The
US Federal Reserve, central bank of the US is also going by the same policy along with the
interest cut to increase the money supply in the economy. RBA is also worried about the
implementation of the policy as it might put inflationary pressure in the economy. The economic
tool is an effective way to increase the money supply in the economy directly in a very short
span of time. Therefore, the policy tool used by the RBA would be effective to push the
economic growth of the country to offset he adverse economic effect of Coronavirus. However,
RBA could have used other policies but the chosen the most risky way to counter the current
economic slowdown of the country. The economic tool is a part of expansionary monetary
policy. The government could have used expansionary fiscal policies too. However, government
expenditure could be another option but at this time, it is difficult to use more fund towards
increasing money supply by that economic tool.
Article 4
https://www.abc.net.au/news/2018-07-05/the-australian-dollar-ups-downs-explained/9923638
Reflective
Nothing fluctuates like foreign currencies. In daily news, one thing keeps on changing
and that is exchange rate. Exchange rate is the measurement of tradeoff between domestic and
foreign currency. With fluctuations in daily market, this measurement fluctuates significantly.
The exchange rate model gives the notion of daily value fluctuation of foreign or domestic
currency. The exchange rate model is the simplest model that shows the impact interest rate and
inflation rate on the foreign currency. The article too speaks about such a currency. Australian

6REFLECTIVE JOURNAL
dollar is one of the highest traded currency in the world but in recent times the currency have has
been fluctuating frequently and the number. It has wide impact on the export market of the
country and the potential foreign direct investment too. The fluctuations impact the forex trader
the most as fraction of change in the exchange rate or value of currency. As mentioned in the
article that forex traders studies three factor such as micro, macro and monetary policy. Macro
factors are related to the global political and economic changes whereas micro is the changes in
labor market and industrial market. Finally, monetary policy play a big role in exchange rate as
interest changes are policy implication of monetary policy. Wit rise interest rate the domestic
currency appreciates and foreign currency depreciates and causing fluctuation in the foreign
currency (Mohammad, Sharma & Pal, 2020). Thus, due to thus exchange rate falls. Thus, rise
and fall in exchange rate indicates the fluctuation f foreign currency and thus exchange rate
model is useful in understanding the value of foreign currency. On the other hand, balance of
payment model also indicates the fluctuation of foreign currency. The positive balance of
payment means there is high amount of foreign currency reserve with the central bank of a
country. However, deficit or negative balance of payment means the central bank is running
short of foreign currency. This has relation to the fluctuation of foreign currency in the economy
and thus balance of payment model too explains the fluctuation of foreign currency.
Article 5
https://theconversation.com/theres-plenty-of-toilet-paper-so-why-are-people-hoarding-it-133300
Reflective
The outbreak of novel Coronavirus has blowing the entire world severely. Many
countries have taken the policy of lockdown to contain the virus. Every news channel and

7REFLECTIVE JOURNAL
newspaper are writing about its impact on the social and economic factors of a country or the
entire world. However, the news article concerned in this case is describing about a shocking
issue. The issue is the shortage of toilet paper. The author of the article was shocked to find that
toilet paper has been out of stock. According to the author of the article, it makes sense that hand
sanitizer and mask may get out of stock but it is unlikely that toilet paper too has been out of
stock. This is nothing but the reason of panic buying. In 1978, similar shortage of toilet paper
occurred in the US. As per the article, the hoarding of toilet paper is occurring due to the panic of
declaration of lockdown. Hoarding of goods gives the consumers a sense of security. Product as
cheap as toilet paper is easiest to hoard. In addition to that, toilet paper has no expiry, above all,
it is a necessary product, and thus consumer do not mind hoarding (Hansman et al., 2019). This
act of hoarding has major impact on the demand and supply of the toilet paper on the market.
The sudden rise in toilet paper demand would force the producers to produce more number of
toilet papers to maintain the stock. This would again increase the demand for raw materials
causing their price to increase. Consequently, the with the rise cost of production the producer
will be forced to increases the price of toilet paper. However, it should be noted that there is no
actual increase in the demand for toilet paper, consumers are just hoarding it. It means that in the
coming months there will be no sales for toilet paper. Hence, the inventory cost of producers will
rise due this hoarding of toilet paper.

8REFLECTIVE JOURNAL
Bibliography
ABC News. (2018). The Aussie dollar rollercoaster (explained for economic amateurs).
Retrieved from https://www.abc.net.au/news/2018-07-05/the-australian-dollar-ups-
downs-explained/9923638.
Derwin, J. (2020). The RBA is set to expand Australia's money supply, implementing
quantitative easing for the first time ever as the coronavirus bites. Business Insider
Australia. Retrieved from https://www.businessinsider.com.au/australia-qe-quantitative-
easing-rba-first-time-2020-3
Hansman, C., Hong, H. G., de Paula, A., & Singh, V. (2019). A Sticky-Price View of
Hoarding. Kilts Center for Marketing at Chicago Booth–Nielsen Dataset Paper Series, 1-
050.
Inoua, S. M., & Smith, V. L. (2020). The Classical Theory of Supply and Demand.
Jericho, G. (2017). Australian consumers need protecting in an economy dominated by so few
players | Greg Jericho. the Guardian. Retrieved from
https://www.theguardian.com/business/grogonomics/2017/dec/05/australian-consumers-
need-protecting-in-an-economy-dominated-by-so-few-players

9REFLECTIVE JOURNAL
Mohammad, K., Sharma, V., & Pal, S. K. (2020). An investigation on Factors Affecting
Exchange Rate Fluctuation on Afghani Currency against Foreign Currency
(USD. Studies in Indian Place Names, 40(56), 1561-1574.
Morton, A. (2019). Australian miners hit by biggest thermal coal price drop in more than a
decade. the Guardian. Retrieved from
https://www.theguardian.com/environment/2019/dec/27/price-of-australian-thermal-coal-
slumps-to-lowest-in-more-than-a-decade
Rodnyansky, A., & Darmouni, O. M. (2017). The effects of quantitative easing on bank lending
behavior. The Review of Financial Studies, 30(11), 3858-3887.
The Conversation. (2020). There's plenty of toilet paper – so why are people hoarding it?.
Retrieved from https://theconversation.com/theres-plenty-of-toilet-paper-so-why-are-
people-hoarding-it-133300
Xu, E., & Lee, T. (2019). Supermarket magazines and foodscape mediation in
Australia. Communication Research and Practice, 1-14.