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HI5003 Economics for Business Assignment
This program has been executed over the topic Economic for business. Economy of a country determines the development rate of the country and the conditions prevailing in the country. Unemployment is an increasing issue in many countries which affects the income level of the people as well as their living standard and health. Inflation creates impact over the price level of the goods and services which affects the society at large. For the purpose of dealing with these issues government adopt measures and implement these measures so as to provide better life to the people. Economic growth is an important aspect of the economy which needs to be maintained so as to operate the economy in an effective manner. The term economy can be understood as the position of a country in respect to the production and consumption of the products and services and the money supply within the boundaries of the country. This program will focus over the different aspects of the economy of a country. Comparison has been made between the GDP of Australia and Malaysia for the last few years and the factors which are affecting the GDP of both the countries are discussed. It also discusses the unemployment trends in Australia, rates, types, issues and government policies adopted by Australia for the unemployment; comparison is made between the inflation in Australia and Japan, causes of inflation and the policies adopted by the government of Australia and Japan for dealing with the inflation. This report covers the Monetary or fiscal policy adopted by Australia in the last 3 to 5 years and the economic growth of Australia and Malaysia and comparison has been made between the economic growth of Australia and Malaysia of the last few years and the impacts of economic growth over the society in positive or adverse manner.
GDP- Compare Australia with Malaysia and discuss their GDP last 2 to 5 years and factors affecting their GDP
Gross Domestic Product is an important element which represents the condition of the economy in financial terms. The term Gross Domestic Product can be defined as the value of the products or services produced in an economy or in the boundary of the country in the monetary terms during a span of time. The calculation of Gross Domestic Product is done on the annual or yearly basis but calculation of Gross Domestic Product can also be done on the quarterly basis. It is an indicator or measure which helps in the analysis of the health of the economy of a country. It is a measure which analyses the total output produced by the use of the labour and capital of a country (Shahiduzzaman & Alam, 2014). It is used for the measurement of the production not the exchanges. It is used by the countries for the purpose of measurement of the performance of the economy of a country. For the calculation of Gross Domestic Product there are two approaches available and these approaches are expenditure approach which uses the sum of the spending of the people of a country and the income approach which uses the sum of the earnings of the people of the country for the calculation of the Gross Domestic Product.
Gross domestic product of Australia: Australian economy has been termed as the one of the largest mixed economies on the global level. The Gross Domestic Product of Australia in 2010 was 2.3 % which increases till 2012 and the Gross Domestic Product of Australia in 2012 was 3.55 % after which the Gross Domestic Product of Australia was fallen to 2.4 % in 2014 and in 2015 it again raises up to 2.62 % and in 2015 the Gross Domestic Product of Australia was 2.45 %. This changing trend in the Gross Domestic Product of Australia shows that there are fluctuations in the GDP of Australia which is the result of various factors of the economy. In 2016 it is expected that the Gross Domestic Product of Australia will be 2.47 %. The major factors which affected the Gross Domestic Product of Australia are change in the economic elements which creates impact over the prices of the products and services and of the raw material and other resources used for the production of the products or services (Salvaris, 2013).
Gross domestic product of Malaysia: Malaysia is a developing country and the major sector which is contributing to the Gross Domestic Product of Malaysia is the tourism sector. The Gross Domestic Product of Malaysia in 2011 was 5.3 % which rises till 5.5. % in 2012. In 2013 the Gross Domestic Product of Malaysia was 4.7 % and in 2014 it was 6.0 %. In 2015 the Gross Domestic Product of Malaysia was 5.0 %. From the analysis of this trend of Gross Domestic Product of Malaysia it has been concluded that the Gross Domestic Product of Malaysia is fluctuating. The factors affecting the Gross Domestic Product of Malaysia are human capital, strength of labour markets, political instability and prices of the commodity (Lean & Smyth, 2010).
Table showing Gross domestic Product of Malaysia for the last 5 years
Chart showing the Gross Domestic Product of Malaysia
Chart showing the contribution of the different sectors in the Gross Domestic Product of Malaysia in 2015.
Unemployment – Discuss the unemployment rate, types, issues, and government policy of Australia and comment unemployment in various states of Australia. You need to specify in different region like NSW, WA, Tasmania, Qld or SA.
The term unemployment can be explained as the situation of not being employed. This type of situation arises when an individual who is looking for a job is not able to find work. Unemployment affects the life of the individual as well as economy of the country at large. In Australia the rate of unemployment has decreased as per the analysis of the recent figures. There has been a fall in the unemployment rate in 2015 and the rate of unemployment was 5.8 % which was recorded as the lowest unemployment rate in the last 20 months. It is expected that the unemployment rate in Australia in 2016 will be 5.6 % which will be less than the unemployment rates in 2015 (Davidson, 2011).
There are different types of unemployment seen in Australia and these are frictional, cyclical and structural. Other minor types of unemployment are long term, natural, classical, real and seasonal. Cyclical unemployment can be explained as the unemployment which occurs due to the cycles taking place in the economic environment of Australia. The reason behind the occurrence of the frictional unemployment is the normal turnover in the labour market and the time which has been taken in finding the new job. Structural unemployment occurs when there is an absence of the certain type of employees in the market. Long term unemployment when an employee is unemployed for a long period of time. Natural unemployment can be explained as a combination of the structural and frictional unemployment. These types of unemployment are seen in Australia which affects the unemployment rates and the lives of the individuals.
The most common causes of unemployment in Australia are as follows:
Closure of the industries: industry shutdown has affected the employment rates at large as the large number of individuals were involved in the industries and closure of these industries has resulted into loss of their jobs.
Offshoring: due to the tax incentives offered to the western countries for the movement of the jobs unemployment in Australia has increased (Nguyen Van,2016).
Immigration: the movement of people for jobs in Australia has increased the rates of unemployment in Australia.
Infrastructure: decrease in the investment in infrastructure sector results into fall in the employment.
Technology: advancements in the technology has reduced the work of humans and increased the role of machinery. This resulted into increase in the unemployment rates.
The issues of unemployment identified in Australia include the negative impact over the health and wellbeing of the individuals, depletion in the living standard of the individual, depletion of the economy due to high unemployment rates and increase in the criminal activities. These issues affect the economic growth of Australia at large. The major areas which suffer from unemployment in Australia are Australian Capital Territory (3.6%), New South Wales (5.2%), Tasmania (6.2%), Victoria (5.9), South Australia (6.4), Western Australia (6.3%), Northern Territory (3.5), Queensland (6.1%) and Victoria (5.9%) (Tiwari, 2014).
The government of Australia has adopted various policies for the purpose of reducing the unemployment in the country. And these policies include monetary policy: according to which the interest rates were cut down for the purpose of boosting the aggregate demand, fiscal policy: in which the tax rates were cut down for the purpose of boosting the aggregate demand, providing education and training with a purpose to reduce the structural unemployment, launch of geographical subsidiaries for supporting the firms for their operations, lowering down the minimum wage rates for the purpose of reducing the real wage unemployment and more flexible labour markets for the purpose of easily hiring the employees or labour (BUDDELMEYER & WOODEN, 2010).
Inflation – Compare Australia with any other country from the list which includes Germany, UK, USA, China, India, Japan, Korea, and Indonesia and discuss inflation and causes of inflation and the various governments’ policy on inflation.
For this purpose a country has been selected and the name is Japan so as to facilitate comparison between the Australia and Japan. The term inflation can be defined as the rise or increase in the price of the products or services which are produced in an economy within a span of time. In the situation of inflation increase in the price of the products and services create an impact over the condition of the economy at large. The impact of inflation can be seen over the prices of the goods and services in the market and the change in the living standard of the individuals living in Australia. Rise in the rate of inflation is inversely proportional to the purchasing power of the individuals. Government makes changes in the inflation rates so as to operate the economy of the country in an effective manner. Government increases the rate of inflation when the supply of money is in excess and the motive behind the rise in the rate of inflation is to maintain the supply of money in the economy as per the requirement. And the rates of inflation are reduced when the money supply in the economy is less (Hossain, 2014).
Australia is a developed economy where the rate of inflation in 2015 was 1.5 %. Australia is targeting at maintaining the inflation rate around 1.8 % and for the year 2017 the estimated inflation rate is 2.1 %. It has been analysed that there is a decreasing trend in the rate of inflation in Australia. The government of Australia believes that a low rate of inflation will result in faster growth of the economy of the country. Increase in inflation rates also affects the exchange rates which results in financial loss to the different sectors of the economy and also create negative impact over the economy of Australia. The major sectors which are contributing to the economy of Australia include the service sector and manufacturing sector (Karunaratne & Bhar, 2011).
The inflation rates in Japan are fluctuating since 2011. In 2011 the inflation rate of Japan was -0.3 % which was 0 % in 2012. In 2013 the inflation rate was 0.4 % which rises in 2014 up to 2.8 % and then the rates fall and came to 0.8 %. The main reason behind the increase in the inflation rate is the increase in the telecommunications and manufacturing automation. The shift in the economy of Japan from the primary and secondary sector towards the automation, and computers has leaded the economy of Japan towards the development. It is expected that the inflation rate will be 0.1 % (Karunaratne & Bhar, 2011).
Monetary or Fiscal Policy – Discuss Australia’s Monetary or Fiscal policy during last 3 to 5 years.
Monetary policy can be explained as the macroeconomic policy formulated by the central bank of the country which is used for the purpose of management of the supply of money in the country and the rate of interest and a demand side economic policy which a government uses for the purpose of achieving the macroeconomic objectives including inflation, growth, liquidity and consumption. The objectives of the monetary policy are to attain the state of maximum employment, stability in the prices and the moderate long term interest rates. Fiscal policy can be explained as policy which is used by the government for the purpose of adjustment of the spending levels and the rates of tax so as to monitor and create an impact over the economy of the country. The objectives behind the use of the fiscal policy by the government for the purpose of attaining condition of full employment, stability in the growth rate of the country, capital formation, encouragement of the investment, effective utilisation of the resources and economic development of the country (Libich, et. al., 2011).
The government of Australia is using Monetary and fiscal policies as an Automatic stabiliser. For the purpose of stability in the currency of the Australia, attainment of the full employment condition in Australia, for the economic prosperity and welfare of the community of Australia, Central bank of Australia has decided a cash rate. The major motive is to maintain inflation rate between 2 to 3 %. Central bank of Australia focuses over the encouragement of the strong economic base for the Australian economy and achievement of the stable economic growth. This has helped the economy of Australia in preserving the value of the money over a long span of time. Monetary policies support the businesses in execution of their operations in a smooth and effective manner. The central bank of Australia is monitoring the conditions of the market so as to ensure that the targets are properly met. These changes in the manner of execution of the operations of the economy adopted by the Australia have helped in changing the exchange rates. It has promoted a better and a strong economy and development of economy of Australia (Jayaraman, et. al., 2016).
Economic Growth – Compare Australia with any other advanced economy or developing country and discuss their economic growth during last 5 years and its effects on the society. (Both positive and negative)
Economic growth can be explained as the enhancement or increase in the amount or quantity of the products or services which are being produced as per the head of the population over the span of time. The economy of Australia is positioned at the 12th place as the largest at the global level. There is a high productivity level which has supported the economy of Australia.
The major role played by the different sectors including agribusiness, education, tourism, mining and wealth management which has resulted into future growth at the global level. The current rate of economic growth is 3.3 %. Different sectors of the economy have contributed towards the economic growth. The growth rate of the economy of Malaysia has increased in the first quarter of this year due to the high volume of the exports which has provided benefit to the economy at large and supported the economy of Malaysia. There has been change in the technology used by the businesses for the purpose of production of the products and services. The major focus of the economy of Malaysia is over the inflation rather than over the growth as when the healthy inflation rate will be maintained then it will leads to attainment of the desired growth rate for the economy (Anwar & Sun, 2011).
It has been analysed that the Gross Domestic Product deflator of the Malaysia has fallen by 0.6 % during the first quarter of the year which helps in fixing the inflation during the period. The major sectors which have helped in the economic growth are service sector which has contributed 65 % of the total Gross Domestic Product of the economy of Malaysia, mining which has contributed 13.5 % of the total Gross Domestic Product of the economy of Malaysia, agriculture which has contributed 2 % to the total Gross Domestic Product of the economy of Malaysia, manufacturing which has contributed 11 % to the total Gross Domestic Product of the economy of Malaysia and construction sector which has contributed 9.5 % to the total Gross Domestic Product of the economy of Malaysia. There is a need of innovations which will help the economy of Malaysia to implement chances which are required. These innovations will help the economy by coping with the issues or problems faced by the economy of the Malaysia. A strong economic base is required for a strong economy (Corrie, et. al., 2013).
This program has been executed on the different concepts of economics so as to analyse the impact of these concepts over the economy of the country. This report has discussed various elements of an economy and these elements of an economy include the Gross domestic product, unemployment an increasing issue, inflation, monetary or fiscal policies adopted by the economy for the purpose of execution of the operations of the economy in an effective manner and the concept of economic growth. This program has helped in the development of knowledge regarding these different concepts including economy, Gross Domestic Product, inflation and its impact over the economy of a county, the concept of unemployment, types of unemployment, rate of unemployment, causes of unemployment and their impacts over the society as well as over the economy of a country. All these aspects play a crucial role in every economy and shape the structure of a country by developing the economy of the country. These concepts are discussed in relation with the economy of Malaysia and comparison has been made with the economy of other countries with the economy of Malaysia by using these aspects of elements of economy.
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Corrie, K., Stoeckl, N. & Chaiechi, T. 2013, "Tourism and economic growth in Australia: an empirical investigation of causal links", Tourism Economics, vol. 19, no. 6, pp. 1317-1344.
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Jayaraman, T.K., Boodhoo, R. & Tari, P. 2016, "Coordination of Monetary and Fiscal Policies in Small Island Developing States: Two Case Studies", Public Organization Review, vol. 16, no. 3, pp. 357-370.
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Libich, J., Savage, J. & Walsh, C. 2011, "Monetary–Fiscal Interactions: How to Improve Policy Outcomes?", Economic Papers: A journal of applied economics and policy, vol. 30, no. 1, pp. 1-5.
Nguyen Van, P. 2016, "Examining the Unemployment Invariance Hypothesis: The Case of Malaysia: Examining the Unemployment Invariance Hypothesis", Malaysian Economic Review, vol. 49, no. 1, pp. 54-58.