The paper "Economics and the World around You" are a wonderful example of an assignment on macro and microeconomics. Typically, an increase in exports subsequently leads to an increase in the national income of a country. In addition, the increase in exports will also lead to an improved balance of trade in the country. Generally, an increase in the level of exports indicates that more goods are being produced, which would require more labor. Therefore, an increased level of exports implies that there have emerged more employment opportunities reducing the level of unemployment.
For instance, an increase in the export of sugar would indicate that there is more production of sugarcane which implies that more land or more farmers have ventured into sugarcane farming. This means that employment opportunities have been created in these additional production units. On the other hand, an increase in taxation also affects the economy. For example, if Income tax is increased on the taxable income, then an individual’ s net income will decrease as a result of the increased taxation on income. This would subsequently lead to consumers spending less as a result of the reduced income after tax deductions. The recent big increases in oil prices will definitely affect some industries in Australia.
Typically, a rise in oil prices would subsequently lead to increased production costs for industries operating in oil-importing countries like Australia. As a result, the inflation rate in Australia will increase as producers increase the prices of goods due to increased production costs. In addition, the level of production in industries will decline. The decreased level of output and production may lead to some companies laying-off some workers due to the increased cost of production.
This also leads to an increased level of unemployment. Therefore, increased oil prices cause cost-push inflation. This is illustrated in the diagram below; Figure 2Government fiscal policies include the measures formulated and implemented by the government to influence the economic conditions in a country. Using fiscal policies, the government attempts to regulate and control the economy with the aim of reducing the unemployment rate, influencing interest rates to control the economy, controlling inflation, and stabilizing business cycles.
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