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[Year] [Type the company name]HP Faculty of Higher Education Assignment Cover Sheet Unit CodeHC1072 Unit NameEconomics and International Trade Assignment NumberEconomic Analysis of the Australian Market Is this a Group or Individual assignmentIndividual AssignmentIf Group, please provide group number _________ Due Date 22/05/20 Declaration Complete this and attach as a front cover sheet to your Blackboard submission We certify that: This assignment is our own work. We have acknowledged and disclosed any assistance received in its preparation and cited all sources from which data, ideas, words (whether quoted directly or paraphrased) were taken. This assignment was prepared specifically for this unit only. The reference list is truthful and accurate and in Harvard referencing style. Student name/sStudent number[must be correct]Which section(s) did each person work on Bryan NgunardiED2149 This cover sheet must be attached to your assignment Contents The Event:3 Impact on Australian Economy:3 Fiscal Policy4 Monetary Policy4 Findings, Conclusions and Recommendations5 References:7 Appendix8 The Event: Lately, the entire world has been facing the deadly disease COVID 19 spread through the deadly virus Corona which seems to have been leaked from a nation like China. The disease has been marked as a pandemic by WHO and has taken away millions of life world over. The major nations like the United States, Italy and Spain are worst affected. The economies of these nations have been adversely affected. Presently, there is no vaccine that develops antibodies against the virus and no antidote or curable medicines have been developed for the same. The only way to stay safe from the pandemic that has been recommended by WHO is social distancing. Social distancing calls for locking down and closing down of the entire economic activity. Closing down of the entire economy has led to the major downfall of the income’s world over. Impact on Australian Economy: The nation of Australia has been quite proactive in dealing with the pandemic. With the diligence governance the economy and markets in Australia were closed immediately after the detection of few cases. The GDP of the economy is expected to fall by more than 10% because of the ongoing impact of the pandemic all over. From the analysis of the various components namely, consumption, investments, government expenditures and net exports, all most all of them are negatively affected. People are losing their jobs, businesses are going down and overall there is an atmosphere of depression in the economy. With the decrease in the personal incomes, the private consumption expenditures have gone down. Following the fall in the businesses, the business investments are bound to fall as there are no incentives to put in more money in businesses because of lack of consumption demand in the economy. The government is trying to put in efforts by stimulating the economy and putting in the economy back on the track of development. The international business transactions and exchange of goods have been paused and hence the component of net exports has fallen extensively. Hence, it can be stated that the GDP and the national income has fallen owing to the massive spread of the corona virus world over. With the fall in the economic activity in the economy, there has been massive loss of jobs. People have either been thrown out of the jobs, or they have been moved to the work from home mode with pay cuts. Unemployment is defined as the situation when the able-bodied people who are willing to work are unable to find a suitable job or are forced to work at very low wages. Therefore, it can be stated that the pandemic of corona virus has led to massive loss of jobs and rise of unemployment in the economy. Major economic projects have been stopped in the mid-way leading to mass unemployment in the economy. Loss of employment has further added to the factors that have led to the fall in the GDP and national income of the Australian Economy. Fiscal Policy Fiscal policy is defined as the government policy of expenditure and taxation so as to bring the economy on the path of growth and development. Since the great depression of the 1930’s, the Keynesian economist have greatly emphasized on the fiscal policy to be employed as a crucial tool to bring out the economy from the digressionary phase and lead the economy on the path of growth and development. The recession caused by the pandemic is supposedly one of the greatest depressions that the nation of Australia has faced in the past three decades. Considering the condition, the government of Australia has taken up proactive fiscal measures so as to help the economy regain the momentum of growth and development. The following measures require an important mention: 1. The government would pump A$17.6 billion ($11.4 billion): Injecting additional funds in the economy would bring up the national income by raising the “G” component of the national income equation. 2. Another fiscal package as announced by the Australian Government will subsidize the wages of 120,000 apprentices, offer one-off cash payments for welfare recipients and deliver payments of up to A$25,000 ($16,160) for small businesses. This stimulus would definitely give a boost to the small businesses and consumption expenditures of the economy, leading to an increase in the level of national income. The fiscal policy taken up by the government in the hour recession is always expansionary so as to help the economy expand the economic activity. The fiscal steps taken by the Australian government is expansionary in nature where in the attempt has been made to inject funds in the economy and help the economy expand. Monetary Policy Monetary policy is defined as the money control policy of the government with the main objective of keeping the money supply at an appropriate level so as to give leverage to the economy to grow and develop. Monetary policy is administered by the central bank of the nation. The theory behind the implementing the monetary policy is to keep the price level of the economy under control. Too much money in the economy following too little production of goods would lead to inflation and conversely, too little money in the economy following too much goods would lead to deflationary pressures. Both the conditions of inflation and deflation are not good for the economy and keeping the appropriate level of money supply in the economy is crucial so as to ensure that conducive conditions for economic development. The monetary policy in Australia is the duty of the Reserve Bank of Australia. The authorities of reserve bank announced the targets for the cash rate and the yield on 3-year Australian government bonds of 25 basis points, as well as the other elements of the package announced on 19 March 2020. The coronavirus remains first and foremost a very major public health issue, but it is also having very significant effects on economies and financial systems around the world. Many countries are expected to experience large economic contractions as a consequence of the public health response. Large increases in unemployment are also expected. Once the virus is contained, a recovery in the global economy is expected, with the recovery supported by both the large fiscal packages and the significant easing in monetary policy that has taken place. Findings, Conclusions and Recommendations The impact of the corona virus is not only devastating in terms of taking millions of lives world over but the impact on the world economy is devastating as well. The Australian took a lesson well in time from the other developed nations of the world well in time. With a few hundred cases detected the government of Australia took a decision of locking down the economy well in time so as to ensure the social distancing and avoiding the widespread contamination of the virus. The social distancing action of the Australian government have given results and Australia is on the stage of reopening the economy and getting back to reopening of the economy as well as getting the life back on track. The prolonged period of lockdown has led to the massive economic losses and considering the impact of this lockdown, it is important to take economic actions so as to ensure that there are major economic losses. The Australian government is proactive and has taken important fiscal measure to provide the correct stimulus for growth. The government has taken the announced the following fiscal steps: 1. The government would pump A$17.6 billion ($11.4 billion): Injecting additional funds in the economy would bring up the national income by raising the “G” component of the national income equation. 2. Another fiscal package as announced by the Australian Government will subsidize the wages of 120,000 apprentices, offer one-off cash payments for welfare recipients and deliver payments of up to A$25,000 ($16,160) for small businesses. This stimulus would definitely give a boost to the small businesses and consumption expenditures of the economy, leading to an increase in the level of national income. These steps are effective and would lead the economy on the path of growth and development. It is important to note that the fiscal stimulus would give the desired results if they are taken with the appropriate combination with the appropriate monetary policy. The reserve bank of Australia has announced the quarterly monetary policy but the special policy with respect to the pandemic and fiscal policy has not been announced. Hence, it is advised that the Australian government is required to revisit the monetary policy. The massive fiscal policy announced would lead to the injection of money in the economy and the appropriate management of the money supply is required so as to ensure that the fiscal policy gives desired results. References: 1. General Information https://www.who.int/emergencies/diseases/novel-coronavirus-2019/events-as-they-happen 2. Global economy could shrink by almost 1% in 2020 due to COVID-19 pandemic: United Nations, Assessed on https://economictimes.indiatimes.com/news/international/business/global-economy-could-shrink-by-almost-1-in-2020-due-to-covid-19-pandemic-united-nations/articleshow/74943235.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst dated 7th April 2020 3. Covid -19: Implications for businesses, Accessed on https://www.mckinsey.com/business-functions/risk/our-insights/covid-19-implications-for-businessdated 7th April 2020 4. Tackling the Corona Virus, Accessed on https://www.oecd.org/coronavirus/en/ Dated 7th April 2020 5. Impact of the coronavirus pandemic on the global economy - Statistics & Facts, Accessed on https://www.statista.com/topics/6139/covid-19-impact-on-the-global-economy/ Dated 7th April 2020. Appendix Australia unveils $11.4 billion stimulus to curb coronavirus impact Despite only affecting about 120 people in Australia so far, economists are expecting the widening epidemic to cause a recession in the second quarter. Reuters| Last Updated: Mar 12, 2020, 08.05 AM IST SYDNEY: Australia's government said on Thursday it would pump A$17.6 billion ($11.4 billion) into the economy to prevent the coronavirus outbreak from pushing the country into its first recession in nearly 30 years. The country's first stimulus package since the 2008 global financial crisis, which helped Australia avert a recession then, illustrates the lengths the government will take to pare the economic impact of the outbreak. Despite only affecting about 120 people in Australia so far, economists are expecting the widening epidemic to cause a recession in