Delivery in day(s): 4
HI5003 Business Economics Paper Editing and Proof Reading Services
This program has been executed over the topic Economics for Business which discusses the different elements of the economy which affects the nation at large. Gross Domestic Product of an economy plays a vital role as it is the indicator which indicates the position of the economy of a country. Gross Domestic Product is the sum total of the value of the services and products which are produced in a specific period of time in an economy. This program discusses the comparison between the Gross Domestic Product of the economy of Australia and China so as to analyse the past trends of the GDP of Australia and China and the factors creates influence over the Gross Domestic Product which affects the economy of Australia and China. It also discusses the concept of unemployment so as to understand the impact of unemployment in Australia, unemployment rates, types, issues and policies of government of Australia and the areas of Australia which are affected at large due to the unemployment. Inflation is an important aspect which needs to be considered for an economy so as to conduct the operations of the economy in an effective manner. Inflation can be explained as the increase or rise in the general price level of the services and products in an economy. Comparison has been made between the inflation in the economy of Australia and China so as to develop an understanding of the concept of inflation and causes of inflation and the policies of government for the purpose of controlling inflation. It also covers the concept of Monetary or fiscal policy and the Monetary or fiscal policy of Australia during the last 3 to 5 years and comparison between the economic growths among the economy of Australia and China and the effect of economic growth on the society of Australia and China.
Comparison between the GDP of Australia and China
Gross Domestic Product of an economy explains the value of the total products or services in monetary terms produced in the geographic boundary of an economy during a specific period of time. The change in the Gross Domestic Product of an economy creates huge impact over the stock market of an economy and other aspects of an economy. It is an effective tool or indicator which is used for the purpose of measurement of the total output of all the products and services produced in the country in a period. There are various reason due to which the Gross Domestic Product of an economy gets affected and these factors are human resource of an economy which are responsible for the carrying out the production process of the services and products in an economy, natural resources which are used as raw material for the purpose of production of the products and services, capital formation which can be explained as the total of land, building, machinery, transportation, medium for the purpose of communication and the power supply which are required for the purpose of execution of the production process, development in the technology which helps in the effective production process and social and political factors which affects the production process of the goods and services (Cheng & Cao, 2014).
The Gross domestic Product of Australia is an important tool which helps in the evaluation of the performance of the economy of Australia. From the analysis of the information gathered from the secondary sources of data collection, it has been analysed that there is a fluctuation in the Gross Domestic Product of Australia. The secondary sources have shown that the GDP of Australia was 2.7 % in 2011 which rises up in to 2012 up to 3.5 %. The GDP of Australia in 2015 was decreased in comparison to the GDP of Australia in 2014 and it is expected that the GDP of Australia in 2016 will be 2.5 %. All the sectors of the economy saw a rise in the early 2000 due to which the demand for the raw material and other resources rises which has resulted into the rise in the prices of the commodity on global level. The different sectors have contributed in the increase in the Gross Domestic Product in the economy of Australia. Australia is a developed economy which is focusing over the reforms and keeping the inflation rates as low as possible so as to provide the products or services at low prices. The graph attached below helps in the analysis of the trend in the Gross Domestic Product of Australia in the last 15 years so as to evaluate the effectiveness of the economy of Australia (Shahiduzzaman & Alam, 2014).
On the contrary, China is moving towards the development phase as it is constantly making efforts for the purpose of improvement in the Gross Domestic Product. China is a developing country irrespective of the development in the technology and the rise in the Gross Domestic Product due to the large population in China. The Gross Domestic Product of China in 2009 was 9.5 % which is constantly falling due to the fall in the private investment and change in the external environment of the country. The Gross Domestic Product of China in 2015 is 6.9 %. China has decided the target for the Gross Domestic Product for 2016 which lies between 6.5 % to 7.0 %. The government of China is facing various challenges which are affecting the process of economic development of China. China has adopted various policies and reforms so as to improve the conditions of the economy and these policies include the one child policy and the use of labour rather than machine intensive techniques so as to utilise the increasing population of China in an effective manner. The graphs collected from the secondary sources of data collection helps in the analysis of the Trend of the GDP of China in the last 15 years (Al?mulali & Che Sab, 2013).
Unemployment in Australia
Unemployment can be understood as the condition that takes place when an individual who is looking for a job but it is unable to find a job due to the lack of skills or the jobs. It is seen in the last few years that the unemployment problem in Australia is decreasing. There are various reasons behind the unemployment in Australia. In the employment rate of Australia there is a fall which is a good sign for the economy of Australia. Rise in the employment rate of Australia will result in depletion in the quality of the economy of the country. With the rise in the number of unemployed people in the country there is a rise in the percentage of the unemployed people in Australia. Rise in the unemployment level results in rise in the poverty and economy stress in the Australian economy (Carvalho, 2015). The main reasons behind unemployment are the increase in the population in the country, low level of literacy in the country and financial instability in the families of Australia. The research over the unemployment rate in Australia has helped in the analysis that the unemployment rate of the youth was 21% between the age group of 15 to 19 years in the year 2003. The objective or aim of economic growth of every economy is to attain full employment level so as to reduce the unemployment and poverty in the country. Full employment will result in to effective and full utilisation of the resources of the economy (Chindamo & Uren, 2010).
From the analysis of this graph collected from the secondary sources it has been analysed that in 2011 the unemployment rate in Australia was 5.1 % which has increased up to 6.1 % in 2015. The reasons behind in this rise are the decreasing literacy level in the people of Australia and increase in the population of Australia. It is seen that the part time employment patterns are gaining much importance which has resulted into increase in the unemployment rates (Davidson, 2011). There are different types of unemployment which can be seen in Australia and these unemployment types include cyclical unemployment, frictional unemployment and seasonal unemployment. Cyclical unemployment can be explained as the factor of the overall unemployment which is related to the trends in the growth and production which takes place in a business cycle in a cyclical pattern. Frictional unemployment can be understood as the unemployment which is present in the economy and the reason behind occurrence of the unemployment is the movement of the people from one job to another job. Seasonal unemployment can be explained as the type of unemployment where the people are unemployed during the certain period of the year and are employed for the remaining period of the year. The issues arises due to the unemployment include low standard of living, decrease in the income level, increase in the number of people below the poverty line and depletion in the economic growth of Australia (Davidson, 2011).
The policies adopted by the government of Australia for the purpose of dealing with the rising unemployment in Australia include work-place training so as to develop the skills and knowledge of the employees, reduction of the geographical immobility of the labour, providing benefits with the help of tax reforms, fixing the minimum wage rates for the employees so as to enhance the living standard of the employees and Government subsidies. The areas of Australia which are suffering from unemployment and these areas are listed below in the table (Morris & Wilson, 2014).
Comparison between inflation in Australia and China
The term inflation can be explained as the rise in the aggregate price level of the products or services produced in a country due to various reasons. Inflation affects the cost of living and affects the standard of living of the people. There are different reasons behind the rise in the inflation and these reasons include the supply of the money as the increase in the money supply affects the economic growth of the economy and affects the purchasing capacity of the individuals, the debt on the nation creates bad impact over the economy of the nation which results in to burden over the individuals, effect of the demand pull will result in increase in the demand and which results in increase in the price of the commodity, effect of cost-pull which will result in the increase in the cost of the products or services will affect the purchasing power of the individuals, effect of the exchange rates which affects the value of the currency of the nation and the purchasing power of the individuals (Clarke, 2016).
In Australia the rate of inflation in 2014 was 2.46 % which has decreased in comparison to 2013. The economy of Australia is one of the strongest economies of the world which is an important player in exporting and importing at global level. the economy of Australia is mainly dependent over the mining sector and agriculture sector which is contributing a significant portion to the economy of Australia. This increase in the exports of Australia has resulted into a stable economy and expansion of the economy of Australia. The current rate of inflation in Australia is 2.49 % (Rushdi, et. al., 2012).
On the contrary, the rate of inflation in China in 2011 was 5.1 % which has fallen to 1.4 % in 2015. This a very big achievement for the economy of China as decrease in the rate of inflation helps in improving the conditions of the economy. The increase in the production process by the China has resulted into balance between the price of the goods and services and inflation rates in the economy of China. The main reason behind the fall in the inflation rates in China is the increase in the use of the labour intensive techniques rather than machine intensive techniques and this has resulted into fall in the prices of the products and services (He & Fan, 2015).
Monetary or Fiscal Policy
The term monetary policy can be explained as the process with the help or use of which the authorities of a country controls the supply of money in the economy so as to ensure a check over the inflation rates by keeping a stable pricing policy of the products and services. The objectives or goals of monetary policy are to attain the level of maximum employment, attainment of the stability in the prices and for the purpose of moderating the long term interest rates. Fiscal policy can be explained as a process or method through which the government of a country adjusts the level of spending and the rates of tax with a motive to monitor and to create an impact over the economy of a nation (Libich & Nguyen, 2015).
The fiscal policy of Australia aim at improving the rates of employments so as to develop the standard of living of the people of the Australia, control the rates of inflation by controlling the spending of the people and to reduce the rates of tax for the purpose of monitoring the economy and to enhance the performance of the economy of Australia. The Fiscal policies adopted by the government of Australia focuses over the development of the position of the Australian economy among the economies of the world and over the implementation of the policies which results in increase in the growth rate in the economy of the nation on long term basis. It is expected that the net debt will peak at 11.4 % of the Gross Domestic Product in 2014 and 2015 and to reduce this rate to 0 % by the year 2021 and 2022. The fiscal policy of Australia is designed in a manner so that the policy provides flexibility to the budget so as to support the economy and to reduce the borrowing by the government (Libich, et. al., 2011).
The monetary policy of Australia focuses over supporting the businesses and the operations of the business so as to provide a strong base to the economy of Australia. Australia focuses over management of the short term interest rates so as to attain the domestic objectives of the policy. The market conditions are monitored so as to ensure that the expected outcomes are achieved. Due to the monetary policy there has been an improvement in the conditions in economy and the growth of the economy. The change in the monetary policy of Australia has resulted into change in the exchange rates and prices of the financial markets. The global financial markets have been improved in comparison to the past years (Hossain, 2014).
The term economic growth can be explained as the enhancement in the performance or capacity of the economy so as to produce the goods and services in comparison with the different period of time. Economic growth is an important part for every economy as development in the economy results in movement of the economy towards the development phase and better future prospects for the economy. For the growth of the economy few ways need to be adopted. These ways include growth in the labour force so as to enhance the production process, to identify the new and better economic resources, to enhance the technology or to develop the capital goods and to enhance the specialisation process. All these helps the economy in the saving of the funds, better utilisation of the resources, making investments and achievement of specialisation (Komal & Abbas, 2015).
The major role is played by the service sector in the economy of the Australia. And the success of the economy of Australia is based on the mineral resources and agricultural resources. The Australian economy is the 12th largest economy in the world. It is supported by the high level of productivity and it contributes towards the development of the economy and the different sectors including education, tourism, agribusiness, wealth management and mining. Australian economy is operating at the low risk environment for the purpose of execution of the business. The economy of Australia is rising in comparison to the previous years. The reason why the economy of the Australia is termed as a developed economy is the developed infrastructure facilities which include transportation facilities, communication facilities and other facilities (Salahuddin, et. al., 2015).
From the past records it has been analysed that there is a shift between the economy of China from a closed and a centrally planned economy to an open and a market based economy. China has seen changes in the economic and social sectors. The Gross Domestic Product of China is also rising but there are few reasons which affect the development phase of the economy of China. These reasons include the increasing population and the lack of private investment. From the recent analysis it can be concluded that the economy of China is the second largest economy of the world and the role of economy of China is increasing at the global level. The 12th five year plan of the economy of China focuses over the resolving of the issues faced by the economy of China (Lee, et. al., 2015).
This program has helped in the development of the understanding and knowledge of the different aspects related to the economy of a country. Discussion has been made over the GDP and past trends of GDP in Australia and China so as make a comparison between the economies of both the countries. It also helps in gaining knowledge of the level of unemployment in the different parts of Australia and the types and the reasons behind the unemployment. There are various reasons behind the rise in the general price level of the products and services in an economy and these reasons behind the rise are discussed in this report in context with the economy of Australia and China. Monetary and fiscal policies are decided by the economies so as to operate the activities of the economy in a smooth manner and to provide a better environment to the people of the country. These monetary policies are discussed in relation with the economy of Australia. Economic growth helps an economy to enhance the living of the people of the country as well as takes the economy of the country towards the development phase. All these aspects have developed the knowledge of the various aspects of an economy on which the economy depends upon.
Al?mulali, U. & Che Sab, Che Normee Binti 2013, "The impact of oil shocks on China's GDP: a time series analysis", OPEC Energy Review, vol. 37, no. 1, pp. 20-29.
Carvalho, P. 2015, "Youth unemployment in Australia", Policy: A Journal of Public Policy and Ideas, vol. 31, no. 4, pp. 36-43.
Cheng, E. & Cao, L. 2014, "Establishing the “Gross Domestic Product of Welfare”: A Major Revision of GDP for a Better Accounting System", World Review of Political Economy, vol. 5, no. 4, pp. 439-454.
Chindamo, P. & Uren, L. 2010, "Vacancies and Unemployment in Australia", The Australian Economic Review, vol. 43, no. 2, pp. 136-152.
Clarke, J. 2016, "Inflation", The Legal Studies Forum, vol. 40, no. 1, pp. 75.
Davidson, P. 2011, "Did 'Work First' Work?: The Role of Employment Assistance Programs in Reducing Long-term Unemployment in Australia (1990-2008)", Australian Bulletin of Labour, vol. 37, no. 1, pp. 51-96.
He, Q. & Fan, C. 2015, "Forecasting Inflation in China", Emerging Markets Finance and Trade, vol. 51, no. 4, pp. 689.
Hossain, A.A. 2014, "Monetary policy, inflation, and inflation volatility in Australia", Journal of Post Keynesian Economics, vol. 36, no. 4, pp. 745-780.
Komal, R. & Abbas, F. 2015, "Linking financial development, economic growth and energy consumption in Pakistan", Renewable and Sustainable Energy Reviews, vol. 44, pp. 211-220.
Lee, S., Jung, Y., Lee, J. & Lee, S. 2015, "Industrial development, financial development and regional economic growth in China", Journal of Economics and Economic Education Research, vol. 16, no. 1, pp. 227.
Libich, J. & Nguyen, D.T. 2015, "Strategic Monetary–Fiscal Interactions in a Downturn",Economic Record, vol. 91, no. 293, pp. 172-190.
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.
Morris, A. & Wilson, S. 2014, "Struggling on the Newstart unemployment benefit in Australia: The experience of a neoliberal form of employment assistance", The Economic and Labour Relations Review, vol. 25, no. 2, pp. 202-221.
Rushdi, M., Kim, J.H. & Silvapulle, P. 2012, "ARDL bounds tests and robust inference for the long run relationship between real stock returns and inflation in Australia", Economic Modelling, vol. 29, no. 3, pp. 535-543.
Salahuddin, M., Tisdell, C., Burton, L. & Alam, K. 2015, "Social Capital Formation, Internet Usage and Economic Growth in Australia: Evidence from Time Series Data", International Journal of Economics and Financial Issues, vol. 5, no. 4.
Shahiduzzaman, M. & Alam, K. 2014, "A reassessment of energy and GDP relationship: the case of Australia", Environment, Development and Sustainability, vol. 16, no. 2, pp. 323-344.