Describe one macroeconomic factor that is currently going through change and an implication this

may have.

A macroeconomic factor that is currently occurring is unemployment, there has been a significant
increase in unemployment recently where it is currently 7% and is expected to reach over 15%
according to the Professor of Economics at UTS, Warren Hogan. Unemployment refers to a situation
in which a person above the age of 15, does not have a job but is actively seeking full time or part
time work. Currently, the cause of unemployment is due to the pandemic of the coronavirus (COVID-
19) where restrictions have been implemented to reduce the spread such as:

 Restricted social gatherings

 Closure of non-essential business
 Border closures
 Travel bans and limited access to public transport

Most of Australia’s significant industries such as tourism have experienced a decrease and therefore
there is a decrease in demand for non-essential businesses, causing demand deficient
unemployment where companies must lay off workers, as it is unnecessary to retain a wide
workforce due to lowered profits.

Implications of unemployment are felt by both the workers and the economy and therefore can
negatively affect Gross Domestic Product (GDP) due to reduced output. Workers will have financial
difficulties and therefore decreased consumer spending which is one of the aggregate demands for
economic growth, will reduce and therefore lead to a recession. Unemployment can also result in
reduced purchasing power where it causes decreased profits for businesses and lead to budget cuts
and workforce reduction, causing a decrease in the supply chain for producing goods.

Describe how this may affect you as a consumer at a microeconomic level.

Unemployment can affect consumers at microeconomic levels, as the unemployed are also unable
to purchase as many goods, so it will contribute to lower spending and output. Loss of output as
resources in the economy are not being effectively utilised would mean lower sales and profits,
attracting less investment and therefore lowering their production levels. The decreased aggregate
component of demand such as consumption would mean that individuals have less disposable
income to purchase goods and services especially electronics.

Another implication of unemployment which affects consumers are social costs and decreased living
standards. Suffering from unemployment includes severe financial hardship, increased crime rates,
family tension and psychological issues as one loses their human dignity and are in social conflict.

As a consumer, I am negatively affected as I have to pay more for goods and services due to a
decrease in the population of the workforce, which means that supply chains may not be able to
keep up with the demand, especially for essential goods and services. My opportunity cost and
diversity are also lowered, some markets are also in monopolistic competition, due to decreased
competitiveness as non-essential businesses especially are in closure. I also cannot expand my
sources of income, as I do not have investment confidence due to decreased disposable income.
Therefore, due to lower disposable income and increase in prices for goods and services, it leads to
lower profits for businesses as well as lower living standards as it creates financial struggle and
mental stress. This would lead to an increase in crime rates and affects my safety.
Chose an industry within Australia. Describe any flow on effects may this have on that industry.

The technology industry especially within electronics would also be negatively impacted by
unemployment which would be in the form of lower productivity, job losses and lower income. Due
to a new working environment for workers, such as working from home, productivity rates and
complexity of tasks would have to be reduced because of network conditions from remote work,
reducing productivity rates. Also, because consumers have less disposable income to spend on the
technology industry, there would further be a loss of sales for technological firms which would cause
a reduction in wages and output. The output especially delivery and logistics would face constraints
as there are restrictions for transportation, due to production theory where the business decides
how much of each commodity sells is what it would produce. Therefore, delaying product deliveries
and supply chain for the domestic or overseas customers and for companies that may depend on
China for manufacturing.

As people have lower purchasing power because of reduced wages and unemployment, it would
cause consumer demand theory, where the demand is based on utility. Hence, essential goods and
services such as medicines and groceries would be higher in demand as they are priority, in
comparison to affording expensive technology equipment or services. A consumer’s injection may be
a business’s profit. As a result, businesses would experience decreased investment and thus there
are less drivers for aggregate demand which would cause that sector of the economy to experience
decreased GDP and economic growth.

During the last month a number of government stimulus packages have been announced. Describe
one and identify the macroeconomic factor which it is aimed at influencing.

The federal government has recently implemented a $130 billion, economic stimulus package which
is the third largest package and is aimed to protect workers who may face unemployment or income
loss and stimulate economic growth which is a macroeconomic factor. This is expected to help 6
million Australians over the next 6 months, allowing for payments of up to tax-free $1500, per
fortnight for pensioners, social security, veteran and other income recipients that are eligible.

Government spending also increases disposable income for individuals thus raising consumer
confidence for spending amongst the domestic population which is an aggregate demand for
economic growth. Interest rates have also been lowered to 0.25% which allows individuals to be
able to borrow money and purchase investments or assets which could generate positive cashflow
and expand the individual’s income. This would stimulate the economy as allows individuals are able
to purchase non-essential and essential goods and services, increasing demand for company
products and services. This also leads to profits for businesses which can be used for raising
employment and therefore reducing costs for production. As there are more injections in the
economy and output from the industry sectors, this would lead to increased GDP and therefore
improve economic growth.
Extra Question (non-assessable): Can you identify any industries which are counter-cyclical in
nature at this time?

During this moment of time a counter-cyclical industry is the retail industry since there is an
increased demand for goods and services as they are essential needs of a consumer. There has also
been an increase for logistics and employment, which would allow supply chains to keep up with the
demand of the consumers. Also, since retail is classified as an essential service, they are still allowed
to operate in the current conditions and have less competitors in the markets, allowing there to be
monopoly competition which would lead to an increase in profits for businesses.

Quiz 3
Q1) Name an Australian industry related to your engineering field. What is the contribution to the
Australian GDP. N.B. (note) Try to be as specific as possible. For example, if you are looking at
mining see if you can find the contribution of a particular field.

The technology sector especially the roles software engineers which are specifically part of the
Information and communication technologies (ICT) industries are an important field of the Australian
economy as they are responsible for improving productivity in the economy. An example of
application for ICT in other industries of the economy, includes the use of 3D printing in
manufacturing, drones in the construction industry and driverless vehicles on mining sites.
Australia’s biggest sector is service based which accounts for 62.7% of GDP and within the service
sectors contains ICT industries. The economic contribution of ICT has been 122 billion GDP which
accounts for 6.6% of Australia’s GDP (alphaBeta, 2019).

Reference

Australia's Digital Opportunity: Growing a $122 billion a year tech industry - AlphaBeta Advisors.
AlphaBeta Advisors. (2019). Retrieved 10 April 2020, from https://www.alphabeta.com/our-
research/australias-digital-opportunity-growing-a-122-billion-a-year-tech-industry/.

Q2) Name three of the largest companies within the industry you have discussed in question one. If
you can, identify or estimate the contribution of one of those companies towards the Australian
GDP. N.B. public companies release annual statements that contain their figures, you can work
backwards from there.

The three biggest companies in Australia within the ICT sector is Atlassian, Computershare and REA
Group. Atlassian is one of Australia’s largest companies, with a market cap of $18 billion and
contribution of around $1.35 billion in GDP (Depreciation + Wages and Salaries + Profit) and has
experienced a revenue of $1.2 billion in 2019 (Atlassian, 2019). According to
PriceWaterhouseCoopers, it is mentioned that it has the potential to contribute $109 billion or up to
4% of GDP by 2033.

Reference

Atlassian. (2019). Retrieved 10 April 2020, from

https://s2.q4cdn.com/141359120/files/doc_financials/2019/TEAM-2019_Annual_Report.pdf.

Q3) Identify and discuss a major project, product, or research being undertaken by one of those
companies identified in question two. If you can, identify and discuss any funding derived from a
government source.

Atlassian collaborated with Facebook and the government to work on a recent project which was to
develop a WhatsApp message service which disseminates information. The new service would allow
government to provide citizens with health advice, updates on lockdown measures and other
accurate information. The development of the Whatsapp channel came through a partnership
amongst the government and Atlassian (Canberratimes, 2020).

Another significant product Atlassian is working on is to add updates on their Jira Software which
aims to help teams plan, track, release and report on work. This new update is including roadmaps,
which would allow organisations to construct multiple roadmaps in a single consumable artefact and
provide better visibility into work being conducted completed in the business. The Jira application is
also used by BAE Systems Australia, which is one of Australia’s largest defence contractors.

Reference

Brown, A. (2020). Government launches coronavirus apps and Whatsapp channel. The Canberra
Times. Retrieved 10 April 2020, from
https://www.canberratimes.com.au/story/6702105/government-launches-coronavirus-apps-and-
whatsapp-channel/.

Q4) Is your chosen industry going through growth or decline over the past decade? Provide a link to
a source supporting your answer.

The ICT industry has been continuously growing over, as university enrolments have been 50%
higher than a decade ago, reaching 36, 335 in 2017. The technology workforce has seen an average
growth of 2.5% annually from 2011 to 2018. The ICT services export has also grown from $2.93
billion in 2016-17 to $3.78 billion in 2017-18 (Digital Pulse, 2019). It will continue to grow which is
evident as the potential GDP value has been forecasted to reach over 7% of GDP accounting for $207
billion by 2030. There is also a rise in software engineers within the ICT sector as there are about
121, 300 software engineers in Australia and expected to grow to 146, 800 by 2023 (JobOutlook,
2020). There have also been more implementations of new tools and smart machines that have
been introduced across other sectors of the economy, which means technology especially ICT
services will always have demand especially in the future.

References

Digital Pulse 2019. (2019). [Ebook]. Retrieved 10 April 2020, from

https://www.acs.org.au/content/dam/acs/acs-publications/Digital-Pulse-2019-FINAL-Web.pdf.

The Australian Government, S. (2019). Software and Applications Programmers | Job Outlook.
Joboutlook.gov.au. Retrieved 1 April 2020, from https://joboutlook.gov.au/Occupation?
search=Career&code=2613.

Q5) Optional question: Can you identify any macroeconomic factors or government actions that may
have impacted the growth of your industry over the last decade.

The Australian ICT exports have been growing which is evident as it totalled $3.78 billion in 2017-18,
a 29% increase from previous year. The ICT services also grew to $515 million in 2017-18 with a $170
million in the previous year and this was due to increased demand from domestic and international
sector. There is demand for ICT services across other sectors such as manufacturing, mining, health
sector and especially the serviced based which is the business/IT sector. This is evident as Deloitte
Access Economics forecasts that the demand for technology workers will increase by 100,000
workers between 2018 and 2024. This increased demand leads to more employment, productivity
and increase for output. The government expenditure has also been increasing for digital
technology, in order to maximise opportunities available, which means more jobs, productivity,
sustainability and adoption of new emerging technologies.

Week 6 Quiz
Q1) What is the difference between current assets and total assets?
Current assets are cash, inventory or other assets that are expected to be converted to cash
within a years’ time. Whereas, non-current assets are a company’s long-term investments
for which the full value will not be realised within the accounting year.

Q2) Describe a reason why you would use a company ACN over an ABN
An ACN is an Australian company number whereas an ABN is a business number. ACNs have
advantages where personal assets do not associate with the company meaning limited
liability hence proprietary limited (Pty Ltd). This means that you are only liable for assets the
company has and not the entrepreneur themselves. So, if an ACN is liable then that would
mean they are only capable of only taking assets of the company but not personal assets as
they are not related. However, for an ABN, they have unlimited liability where a person can
sue them for all those assets including personal. Therefore, there are more advantages of
choosing ACN for a company compared to an ABN as it would protect personal assets when
it comes to legal issues.

Q3) What are the three core documents within financial accounting?
The three documents within financial accounting are income statements, balance sheet and
cash flow statements. The income statement shows the profitability of the company, the
balance sheet contains assets and liabilities whereas the cash flow statement outlines the
revenue, expenses and thus cash inflows of the company through their operational and
external investment sources.

Q4) Describe the relationship between revenue and profit, how are they different?
Revenue is the aggregate income generated by regular business activities such as through
sales of goods or services. This can consist of operating income where the company sells
goods or services and non-operating income which comes from non-primary sources such as
assets, sales, investments, licensing, settlements, and law cases. Whereas, profit is the
amount of money generated based on the money that was spent. Hence, the income that
remains after accounting for expenses, debts, operating costs, is known as profit.

Q5) How do loans affect a companies leverage ratios?

A leverage ratio is one of the financial measurements that look at how much capital comes
through the form of debt such as loans or assess the ability of a company being able to meet
financial obligations. Therefore, businesses with huge capital expenditure, would need to
take out more loans compared to other companies. These large loans can increase their
leverage ratio if the rate of return through operations and sales is low and not generating
enough revenue to increase assets. This would increase their debt ratio and thus limit their
profits. However, if a company can generate higher rate of return than the interest rate of
the loans then it would lead to profit and therefore positively affect the leverage ratio by
decreasing it.