University Economics Assignment: Workshop Questions, Q3 2019

This economics assignment addresses two workshop questions. The first question examines the Human Development Index (HDI) as a measure of economic and social wellbeing, using the Gulf of Mexico oil spill as a case study. The solution explains the HDI's components and its relevance in evaluating the spill's impact on life expectancy and income. The second question analyzes the Australian economy's recessionary state, focusing on Keynesian policies to address debt, job insecurity, and declining retail demand. It suggests expansionary fiscal and monetary policies, including increased government spending or tax cuts and a reduced cash rate, to boost aggregate demand and stimulate production. The assignment references relevant academic literature to support its arguments.

Running head: ECONOMICS
Economics
Name of the Student
Name of the University
Course ID

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Table of Contents
Workshop Question 1......................................................................................................................2
Thesis statement...........................................................................................................................2
Discussion....................................................................................................................................2
Workshop Question 2......................................................................................................................3
Thesis statement...........................................................................................................................3
Discussion....................................................................................................................................3
List of References............................................................................................................................5

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Workshop Question 1
Thesis statement
“Human Development Index is a good indicator of economic and social well-being”
Discussion
The Human Development Index is a measure which is developed by United Nation and is
used to rank nation according to the economic and social development of the country. In
measuring social welfare, the index consider three major areas such as level of income, life
expectancy and level of education. The measure gives equal weightage to each of the indicators.
In terms of HDI, rank of a country lies between 0 and 1 (Herrero, Martínez and Villar 2019).
Value closer to 0 indicates low level of economic development and value closer to 1 implies high
levels of economic development.
Human Development Index (HDI) is a better measure of economic development as it
includes some qualitative measure such as level of education and life expectancy in addition to
the quantitative index of Gross Domestic Product of a nation. The index helps to design policies
depending on HDI rank. HDI is considered as a good index for capturing overall well-being of
people and society for various reasons. Firstly, the index measure human development in three
important aspects necessary for a healthy life. Secondly, HDI is a useful index for measuring
development as it incorporates social and economic indicators and thus help to reduce anomalies
related to development measure.
The oil spill in the deep water horizon of Gulf of Mexico occurred on April 20, 2010.
This is known as one of the major industrial disasters characterized by the explosion in the mid-
water and spread bulk amount of methane and oil (Marietou et al. 2018). All the fish and turtles

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faced life threats as huge amount of oil gets mixed into the water. Both economists and biologists
were concerned regarding the severity of impact of the oil spill. Sea turtles living in the sea water
died. Birds lost their thermo regulating power as oil stuck to their feathers. The impact is not
limited to wild life but also affect well-being of people living in the region as people depend on
the environment and wildlife in terms of commercial fishing, tourism and food. Following the
destruction of fisheries, commercial fishing was adversely affected hampering people’s income
depending on fishing (youtube.com 2019). From oil spread people can experience lower life
expectancy due to contamination of food and water. Human Development Index which considers
the aspects of life expectancy and income level therefore is the best measure to evaluate impact
on economic and social being due to the oil spill.
Workshop Question 2
Thesis statement
“Keynesian policy can give appropriate solution to the problem that Australian
economy is currently facing”
Discussion
The given article summarizes current recessionary state of Australian economy adversely
affecting small businesses of the economy. Businesses are now facing the burden of huge debt
resulted from economic downturn. Businesses are now likely to get a knock from the debt
collectors. Retailers in Australia are facing a decline in demand. Demand has been particularly
lowered for items perfume, entertainment and jewellery. Persistently low wage has lowered
confidence among the consumers contributing to a decline in demand. The situation of the
economy gets further worsened due to lack of job security (Taylor 2019). The problems that are

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currently troubling Australian economy are collection of debt, increase in job threats and
slowdown in retail condition.
The current problems of the Australian economy can be resolved following economic
principles of Keynes. The proposed theory of Keynes deals with aggregate expenditure of the
economy and how it affects economic output and price level. Keynes recommended demand side
policies to address the recessionary state of the economy. Two vital demand side policies to
address economic problems are fiscal policy and monetary policy. Given the economic downturn
Australian economy should undertake expansionary fiscal policy or expansionary monetary
policy. Expansionary fiscal policy include instruments like increase in government expenditure
or decrease in tax rates (Dillard 2018). This policy raises the aggregate demand in terms of
increasing disposable income. For expansionary monetary policy RBA needs to reduce the cash
rate. This by stimulating investment increases aggregate demand.
The expansion of aggregate demand increases production activity boosting labor demand.
Increase in labor demand solves the current problem of job security in Australia. With a higher
labor demand, there is an increase in equilibrium wage (Lawlor 2016). The demand side policies
as proposed by Keynes has long term real effect on economic output.

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List of References
Dillard, D., 2018. The economics of John Maynard Keynes: the theory of a monetary economy.
Pickle Partners Publishing.
Herrero, C., Martínez, R. and Villar, A., 2019. Population structure and the human development
index. Social Indicators Research, 141(2), pp.731-763.
Lawlor, M., 2016. The economics of Keynes in historical context: an intellectual history of the
general theory. Springer.
Marietou, A., Chastain, R., Beulig, F., Scoma, A., Hazen, T.C. and Bartlett, D.H., 2018. The
effect of hydrostatic pressure on enrichments of hydrocarbon degrading microbes from the Gulf
of Mexico following the Deepwater Horizon oil spill. Frontiers in microbiology, 9, p.808.
Taylor, D. 2019. Retail conditions 'as bad as the GFC' driving small businesses to the wall.
[online] ABC News. Available at: https://www.abc.net.au/news/2019-06-19/australian-small-
businesses-struggling-amid-economic-downturn/11224246 [Accessed 18 Jul. 2019].
youtube.com 2019. Gulf Oil Spill Effects On Wildlife. [online] YouTube. Available at:
http://www.youtube.com/watch?v=8Uax5FRWnvs [Accessed 22 Jul. 2019].