Question 1 – Mining Boom
Due to increasing demand for natural resources such as coal and iron ore (Anthony, 2016) the mining sector of Australia boomed as it exported to countries such as China (Heath & Petrie, 2016). Thus, affecting the Australian Gross domestic product (GDP). GDP is “the market value of all final goods and services produced within a nation 's geographic borders during a period of time, usually a quarter or a year” (Layton, Robinson, & Tucker, 2016, p. 257) and helps to measure economic growth. The components of GDP are derived from the formula GDP = C + I + G + (X - M). That is, gross domestic product = consumption + investment + government spending + (exports - imports).
During the 3 phases of the boom spending created a chain reaction known as spending multiplier of further spending, which caused a greater cumulative change in aggregate demand beyond the initial change. Thus, affecting the GDP components and economy.
Phase 1 saw the prices for existing mining outputs to increase substantially as demand increased. According to (Phillips, 2016) prices for exports such as iron ore increased from $20 a tonne and peaked at about $170 a tonne. This demonstrated capital and labour investment
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Producers react by decreasing prices to clear stock. However, as production is cut back there may be a need to cut employees to reduce costs, which increases unemployment. This inturn reduces household income, and therefore household expenditure, which affects consumption. Also may affect terms of trade, which directly affects the purchasing power of domestic income, which affects supply of exports and imports. Thus, the price fall of iron ore from P1 to P2 has an aggregate reduction in demand on various AD components and GDP that shift the AD curve leftward from AD1 to AD2 that requires new equilibrium to create
First, I will discuss the time period between 1973-1974. Because the unemployment and inflation rates are higher than normal, we can assume that the aggregate-demand curve is downward-sloping. When the aggregate-demand curve is downward-sloping, we know that the economy’s demand has slowed down. When the economy’s demand has slowed down, businesses have to choice but to raise prices and lay off workers in order to preserve profits. When employers throughout the country respond to their decrease in demand the same way, unemployment increases.
middle of paper ... ... Booms can also be made by surges in public and private spending. An example of this is if the government spends a lot of money to fight a war but does not raise taxes, the increased demand will not only cause an increase in the output of war materiel, but also an increase in the take-home income of government plant workers. The output of all the goods and services that these workers want to buy with their wages will also increase.
Mid September 2008 saw a significant change for the Australian economy, with the collapse of the Lehman Brothers triggering the Global Financial Crisis. The Global Financial Crisis was characterised by a tightening in the availability of money from overseas markets and resulting in governments having to intervene to maintain market stability. The Australian economy and its leaders generated considerable discussion about the prospect of a global recession, while most expected the financial crisis would have a major impact on the Australian economy, a factor that was not considered was the immediacy of its effects. The December quarter of 2008, saw business stocks devalue by $3.4 billion, the largest fall on record. In addition, there was a considerable softening in property prices, resulting in many companies/people having too much debt vs. too little wealth. With this, consumer confidence plummeted which in turn deteriorated consumption. Throughout the month of September and into October, the financial crisis spread from the United States to Europe, and all around the global economy, with economies contracting in growth.
With average income decreasing, consumers have the incentive to save, lowering GDP. With the economy starting to fall interest rates will fall and a domino effect
= Mass production was also a key factor in the Boom. The new use of 'assembly lines' meant that production was far cheaper and faster. The first to start using this technology was Henry Ford, a car manufacturer. By 1925, Ford was producing one car every ten seconds, this meant more profit for America, and many jobs were available for people to work doing one job on the assembly line.
The measure of growth is flawed, how countries see their growth is based on the consumption of their people. Many countries use the GDP (Gross Domestic Product) as an indicator for growth, as defined in It’s All Connected, “(GDP) is a calculation of the total monetary value of goods and services produced annually in a country” (Wheeler 11). The...
To start off, the economy boom was when many Americans came to the peak of their financial gains. Because of Americas new founded wealth, americans citizens used their new extra money on entertainment. Prohibition caused economic growth due to the illegal selling and using of liquor. More jobs became open to all people and wages, and hours increased making it easier for people to have a satisfying living. Child labor laws made restrictions on the age, and how much a child could work, and this made people way more relaxed about factory workers. Loans were an easy way for people to be able to achieve their goals during this period of time. Along with loans, credit was a way for people to use money that they may not have at the time and then pay it back to the bank later, thus the economy became very powerful coming out of the Great Depression. All of these factors led to...
"Australia." Economy: Population, GDP, Inflation, Business, Trade, FDI, Corruption. N.p., n.d. Web. 2 Dec. 2013. .
People from India, China and Britain came to dig for gold so they can revamp their future life. This migration had a huge impact on the Australian society because more than 700,000 people from overseas came to Australia to settle. Later on the 1850s Australia’s population increased by a million. As the popularity of the gold rush spreaded like a bushfire, the Australian government introduced a license that everyone has to get. This was a huge advantage towards the Australian economy because they are getting more money from people buying these licenses.
This economic growth didn’t however continue for long, with the economy peaking just before the start of the year 2000 followed by a sharp downturn that resulted in a temporary recession occurring around the middle of the year. This erratic behavior, most pronounced in retail trade, can be explained by the effects of both the millennium bug and the introduction of a general consumption tax in the form of the GST. The millennium bug caused much panic and with it bought panic spending especially in the IT sector thereby over inflating an already close to booming economy and after the non-event that the millennium (or Y2K) bug caused spending slumped and then further slumped due to the holding back of consumer spending on big ticket items such as cars and houses until the introduction of the GST.
Australia has had one of the most outstanding economies of the world in recent years - competitive, open and vibrant. The nation’s high economic performance stems from effective economic management and ongoing structural reform. Australia has a competitive and dynamic private sector and a skilled, flexible workforce. It also has a comprehensive economic policy framework in place. The economy is globally competitive and remains an attractive destination for investment. Australia has a sound, stable and modern institutional structure that provides certainty to businesses. For long time, Australia is a stable democratic country with strong growth, low inflation and low interest rate.(Ning)
Mail orders catalogues Ensured that mass consumption was always kept going and that people could get things they wanted. Other factors which helped bring the boom about were Natural resources and new technologies these helped as the U.S.A had a great source of natural resources to supply to help make new technologies and mass production of things. The new technologies allowed people to buy things o help them around the house and to give them a pleasurable life. This was only possible as the Americans discovered credit. Credit was another factor in the boom, credit allowed to people to buy things
This shifts the supply curve to the right, lowering price. The firms making losses leave the market, which shifts the curve to the left and raises price. Allowing the rest of the firms to earn normal profits, as shown in Figure 1&2.
... technological progress (the actual cost of the actual producer prices drop or increase) caused. (Note: Of course, if technological progress is the price of the product after the fall, FG Theorem is not established, so it does not necessarily affect the distribution of income, such as SS as shown in Theorem. However, a small country in the open cases, product prices given by the international market, so the assumption that commodity prices remain unchanged or valid, FG theorems generally be valid.) Obviously, if technical progress can not be changed after the factor prices, the production of the two departments, the capital / labor ratio would not change, then the imbalance in supply and demand factors will occur. If this imbalance can not be adjusted by the factor market, some elements will be in short supply, while the other elements will be unemployed or idle.
Lower GDP for the economy also one of the consequences of unemployment in current time. High rate of this issue implies the economy is operating below full capacity and inefficient so that it will lead to lower output and incomes. Because people who are searching for their work usually will spend less in purchasing goods and