Economics Real Life Examples

Real World Examples IB ECONOMICS
Study online at https://quizlet.com/_2mdnm2
1. Subsidies China subsidising solar panel production
Australian Government in 2014 subsidised the min-

ing and exploration of coal by energy companies by
$4 billion AUD.
China: to produce technologically advanced prod-

ucts and undercut foreign manufacturers has
quadrupled exports in 16 years
South Korean government subsidizing domestic

fuel.
2. Price Ceiling (max U.S. 1970 petrol max price

price)
Vietnam's price ceiling on milk products, United
States' price ceiling on rents.
New York price ceiling on rent for housing and apart-

ments.
3. Negative Consump- Cars in London vs Congestion Charge

tion Externality
Consumption of alcohols in South Korea (ie. many
car accidents leading to deaths, injuries - making
loud noises at late night). Smoking
4. Negative Production Thames polluted = Property Rights granted to

Externality Thames Water Coase Theorem
5. Taxing Negative Exter- Pigouvian/Fat/Carbon Tax

nalities
BC - $30 per tonne of CO2
The Carbon Tax implemented by the Gillard Govern-

ment in Australia in 2012. but later abolished
6. Limitation of Carbon Harms Economic Growth (US and China refuse)

Tax
1 / 22
7. Cap & Trade Policy UN Kyoto Protocol 2000 (150 countries, US didn't
ratify)
8. Reasons for trade Different Factor Endowments: China imports miner-

als, natural resources, metals, and energy resources
from Australia.
Increased Welfare - specialization and trade allow

countries to gain a higher level of consumption than
they would do domestically and this leads to in-
creased welfare and higher living standards.
Real World Example: Japan is an excellent example
of how the trade increased welfare and higher living
standards.
Economies of Scale - with specialization and produc-

tion on a larger scale than may be possible domesti-
cally, a country may be able to gain more economies
of scale. This will lead to lower average costs and
benefit consumers through lower prices.
Real World Example: China gained the economy of
scale.
Diversity of Choice - trade enables people to access

and approach diverse and variety of goods and ser-
vices that may not be available only in the domestic
market.
Real World Example: Korean consumers are able to
buy Apple products from US and have wide variety
of choice along their own electronics manufacturers
Samsung and LG.
Increased Competition - Increased competition

helps domestic industries to have improvements in
productivity and efficiency. In addition, it gives do-
mestic firms better incentive and improve their prod-
ucts to compete against foreign firms.
Real World Example: As Apple introduced the
iPhone, Korean phone manufacturers such as Sam-
2 / 22
sung and LG began to make their own smart phones
to counter the increasing Apple influence on Korean
domestic market.
Engine for Growth - increased trade helps domestic

economies to grow and make improvements in living
standards of the people.
Real World Example: Korea experienced enormous
economic growth as they initiated trade with other
countries. As a result, the HDI, which indicates the
living standards, increased ranking 12th in the world.
9. Quota Eu quota on 20% imported Japanese cars
10. Fixed Exchange Rate North Korea has a fixed exchange rate. However, the
fixed exchange rate does not accurately reflect the
market value of the currency as the market value for
the currency is often 20 times lower than the fixed
value for the currency.
11. Managed Floating China is implementing dirty float system for the ex-
Rate change rate. It sets the maximum value to the ex-
change rate in order to artificially depreciate its cur-
rency and therefore export more to the world.
12. Contractionary Mone- Chile became the third Andean nation in just over
tary Policy a month to raise interest rates as a slump in local
currencies pushed up inflation across the region. The
central bank indicated further increases will follow.
2015 - October
13. Australia's Unemploy- Australia's jobless rate remained steady at 6.2 per
ment cent in September, despite a small decrease in the
actual number of people employed, according to the
Australian Bureau of Statistics.
The ABS said on Thursday the decrease of 5100 in

the labour force was a result of lower "male full-time
and part-time employment and female full-time em-
3 / 22
ployment, with the largest decrease in male full-time
employment".
14. Aggregate Demand - It seems like only yesterday that the biggest threat to
Housing the Australian economy was slowing growth in Chi-
na, by far our largest trading partner, and the related
decline in mining-related investment and commodity
prices.
However, record low interest rates have fuelled ro-

bust demand from first home-buyers and buy-to-let
and buy-to-flip investors. This, in turn, has encour-
aged developers to build new apartments and hous-
es, and consumers to spend on furniture and other
household goods and services. The issue is that
demand for new and existing housing is slowing
This, in turn, may affect many of the businesses

that are supposed to be benefiting from record low
interest rates.
With the commodity boom well and truly over, Aus-

tralia can ill afford an abrupt end to the housing
boom.
15. Aggregate Demand - IN a shock move, Westpac today said it was raising
Westpac its variable mortgage rates next month by 0.2 per-
centage points to 5.68 per cent.
16. Aggregate Demand - WHILE global financial markets are in turmoil as

Chinese consumers investors continue to fret about China's apparent
economic slowdown, consumers in the country are
increasingly upbeat.
China's faltering industrial profitability and output
have caused financial market anxiety.
The Chinese economy remains a key source of con-
cern for global investors. Once again though, the sur-
veyed opinions of China's consumers are showing a
steady improvement.
4 / 22
Urban Chinese consumers seems oblivious to the
tirade of negativity that surrounds China at the mo-
ment
17. Monetary Policy - US THE US Federal Reserve has opted to keep rates
on hold at the end of its eagerly awaited September
meeting.
Low inflation its major concern.
"Inflation is anticipated to remain near its recent low
level in the near term" central bankers said in a
statement.
"But the committee expects inflation to rise gradually
toward 2 per cent over the medium term as the labour
market improves further and the transitory effects of
declines in energy and import prices dissipate."
"The committee judged it appropriate to wait on fur-
ther indicators... to bolster its confidence that infla-
tion would rise to 2 per cent over the medium-term.
18. China's GDP "The collapse in equity trading activity will also have
produced a sizeable drag in financial-sector output
growth last month.
"But the desire to keep growth close to the annual
'about 7 per cent' target means that growth probably
won't be shown to have slowed by much,"
19. Unemployment/Trade - Australia's 90-year history of assembling and build-

Agreements - ing automobiles is coming to an end.
Australia's Car - Now a debate is raging about whether the govern-
Industry ment should once again stretch its financial assis-
tance - which has already run to billions of dollars
in the past two decades - to the broader industry as
they struggle for survival in the void left behind.
- But the opposition, industry experts and academics
argue the funding should run until 2020/21, its orig-
inal legislated end, and be broadened to give busi-
nesses within the automotive supply chain a chance
to diversify.
- The Andrews' Labor government in Victoria - where
5 / 22
about 55 per cent of Australia's automotive workers
live - is concerned.
- MNC Bosch is looking to close down "The chal-
lenge in a multinational is that you are not just com-
peting with your typical external competitors. You're
competing for capital investment from a parent who
can invest pretty much anywhere in the world. Aus-
tralia is not at the front of mind for the group when
they consider where to make investments."
- Government estimates the closures will trigger a
net loss of just under 200,000 jobs, with about $29
billion wiped off Australia's gross domestic product -
a gauge for the economy's health.
BUT
- Treasurer Scott Morrison said international trade
agreements, including the ones Australia has signed
with Korea, Japan and China, as well as the 12
nation Trans-Pacific Partnership would help fuel Aus-
tralia's next wave of economic prosperity.
- A $155 million 'growth fund', which was announced
in May 2014, was helping automotive workers find
new jobs.
20. Australian Exports - Beef is being hailed as the new iron ore, as Indonesia
Beef and the rapidly expanding Chinese market drive up
demand for our cattle.
And that demand — coupled with favourable grazing

conditions — is turning Top End livestock stations
into multi-million dollar businesses.
It's even been tipped to be as big as the minerals

boom.
---
Australians generally consider Brahman beef too
tough to eat — as Wooley points out, any attempt to
barbecue it turns it as tough as leather in moments.
But Asian consumers love it for slow cooking.

6 / 22
21. Australia's Exports - Australia's wine exports have grown at their fastest
Wine rate since late 2007 as the twin forces of a falling
Australian dollar and growing demand from China
bring more optimism to the $4 billion wine industry.
Export sales to China in the 12 months ended Sep-

tember 30 soared by 47 per cent to $313 million,
making it Australia's third-largest export destination
by value behind the United States and United King-
dom.
The Australian dollar has fallen more than 20 per

cent in the past 15 months, and now appeared to
be holding around the low US70c mark and this was
important. (more certainty)
But Australia's exports into that country are still at

less than a third of those from France.
22. Ways to increase em- AS SOUTH Australia's economy continues to strug-

ployment - SA gle, business leaders are urging the government to
act in order to provide a much needed jump-start to
the state's jobs sector.
Organisations urging the government to sell off SA

Water in order to avoid a "major economic depres-
sion"
SA Water contributed $300 million a year to the

state's economy but a sell-off would add significantly
more value.
But SA Treasurer Tom Koutsantonis is not a support-

er of the idea and said "unlike the Liberal Party" he
would not entertain the idea of selling off SA Water
to an interstate or overseas monopoly.
23. R&D in Singapore's research & development (R&D) efforts

Singapore/Sustainabil- have paid off with startups more than doubling in the
7 / 22
ity/Improvements in last decade from 24,000 in 2005 to 55,000 last year.
the standards of living
Among other R&D efforts, Mr Lee (PM) added that
the Agency for Science, Technology and Research
(A*Star) has catalysed more than $1 billion invest-
ments.
These R&D efforts have also led to improvements

in the daily lives of Singaporeans, such as ongoing
research projects studying how urban design can
reduce urban heat or the Smart Nation programme
which will see how technology can be applied in the
areas of transportation, healthcare and education.
This will enable an integration of all the capabilities

needed to support the future of manufacturing ef-
forts.
Self-driving vehicles, if developed successfully, could

solve commute problems and ease congestion on
the roads.
24. The consequences of Double edge sword, positive effects may occur, but
weakening the Singa- negative consequences loom large.
pore dollar
1. Singapore's exports become cheaper, which can
serve to boost demand
2. But Singapore's imports simultaneously become
more expensive, which means higher prices for im-
porters.
3. Singapore imports almost everything it uses, raw
materials become more expensive.
4. Higher imported inflation else eats into household
incomes, which in turn impinges on domestic de-
mand. Ultimately, that adversely affects growth.
5. Because interest rates rise as expectations of a
weaker Singapore dollar increase businesses and
households take a hit from higher borrowing costs.
8 / 22
FURTHERMORE, a weaker Singapore dollar may
not provide must boost to exports either, with oth-
er countries devaluing their currencies aggressively,
Singapore's exports still seem expensive, at least
comparatively.
THEREFORE, growth should come from more

hard-earned ways
- Economic restructuring
- Technological advancements
- Higher productivity
25. Malaysia's Economy Malaysia's ringgit fell to a one-week low on Monday

(Oct 19) ahead of Friday's budget as investors focus
on what measures the government will take to shore
up the economy amid a collapse in commodities and
slowing global growth.
"The expectations are a bit high about whether

there's a macro policy mix to help support the econ-
omy," "There's a need to support the economy and
that may have an impact on the budget deficit."
THIS COULD BE DUE TO PALM OIL:

Malaysia is Asia's only major net oil exporter and
is also the world's second-biggest producer of palm
oil, which despite recovering some ground from a
2015 low in August is still down 6 per cent from this
year's peak in September. The government derives
about 22 per cent of its income from energy-related
sources.
26. Japan's Economy Japan's economy was expected to continue recover-

ing moderately even though the slowdown in emerg-
ing markets was weighing on exports and output.
The BOJ has kept monetary policy steady since ex-

panding its massive stimulus programme in October
last year. With inflation having ground to a halt on
9 / 22
slumping oil prices, the central bank remains under
pressure to ease again ahead of a rate review next
week.
27. The consequences of In Australia, hangovers are causing 11.5 million "sick
hangovers days" a year at a cost of $3 billion to the Australian
economy, recent research suggests.
The American cost estimate includes spending on

health care as well as the economic toll of lost pro-
ductivity, car crashes, crime, and deaths attributable
to excessive alcohol consumption.
28. Britain and China's re- This friendship is a visionary and strategic choice
lationship - trade that fully meets Britain's own long-term interest.
The Chinese economy is slowing down and it

is changing its nature from an investment-driven
growth economy to an economy that has to look to
invest in other places," he said. "Chinese businesses
are very eager to invest in other countries and some
of the best export products that China has to offer are
to do with infrastructure, high-speed trains, energy
things like that and these are exactly the things that
the UK needs.
As well as securing billions of pounds of Chinese

investment, Britain hopes to advance efforts to turn
London into a key trading centre for China's currency,
the renminbi, and to boost trade with the world's
second largest economy.
During a tour of China last month, chancellor George

Osborne unveiled plans to make it Britain's second
biggest trade partner by 2025.
However there are some concerns about China's

human rights' issues.
10 / 22
Nevertheless, it's a risky policy but it is certainly
one that in terms of trade relations could be very
beneficial
29. British steel left weak About half of the 1.6bn tonnes of steel made globally
by China comes from China: firms operating in the UK just
cannot compete
In the past 18 months, China has flooded the market

with cheap, subsidised steel as its economic growth
has slowed. Beijing wants to grab whatever foreign
cash it can on global markets by selling its products
at a knockdown rate.
Director of the industry body UK Steel, said: "Chi-

nese steelmakers are fully subsidised by the Chi-
nese government and their regions."
Ministers insist they are powerless to hold back the

rising tide of Chinese metal, noting that the govern-
ment is bound by EU rules which prevent the state
intervening in such matters.
Tata confirmed on Tuesday that it is cutting almost

1,200 jobs as part of a radical shakeup of its long
products division, which makes steel for the rail and
construction sectors.
30. Is the UK marginalised One key issue in the debate about whether the UK
in the EU? should remain in or leave the EU is how far the UK is
currently marginalised in Europe. As Nigel Lawson
put it in the Times in May 2013: "While never 'at
the heart of Europe' ... we are now becoming in-
creasingly marginalised as we are doomed to being
consistently outvoted by the eurozone bloc."
Overall, using the best available data on EU deci-

sion-making, there is strong evidence that on aver-
age the UK has not been marginalised in the making
11 / 22
of EU laws. The UK government has been closer to
final policy outcomes than most other governments.
This is also true for policy issues the UK government
has been particularly concerned about, although
there is some evidence that on certain policy issues,
including internal market and trade, the UK has been
less content with final EU decisions.
31. When Gas Becomes When gas prices fall, Americans reliably do two
Cheaper, Americans things that don't make much sense.
Buy More Expensive
Gas They spend more of the windfall on gasoline than
they would if the money came from somewhere else.
And they don't just buy more gasoline. They switch

from regular gas to high-octane.
Americans, in short, have not been behaving like the

characters in economics textbooks.
There is, however, a pretty good explanation for this

kind of pattern. Researchers have found that peo-
ple treat money as earmarked for particular kinds
of spending, a tendency behavioral economists call
"mental accounting." If someone is buying rounds at
the neighborhood bar, people tend to treat the money
they didn't spend as "beer money," and sooner or
later they tend to spend it disproportionately on beer.
As a result, they end up drinking more beer than they
had originally intended.
Professors Hastings and Shapiro showed that

households adjusted their gas consumption much
more sharply in response to changes in gas prices
than in response to equivalent changes in overall
income.
Moreover, this behavior was prevalent: 61 percent

of the households made at least one irrational gas
12 / 22
purchase. People "treat changes in gasoline prices
as equivalent to very large changes in income when
deciding which grade of gasoline to purchase," they
wrote.
32. Energy Drinks Are America's affection for regular soda, as I reported
Popular, but Not this month, is waning.
Enough to Replace
Soda It's true that as Americans come to crave more
beverage variety, new types of drinks are becom-
ing more popular. Those growing categories include
some with a lot of sugar, like energy drinks, sports
drinks and ready-to-drink coffee drinks. But sales of
those products have not grown enough to compen-
sate for the large declines in soda, a much more
popular category.
Sales data at the household level also show de-

clines in calories from beverages. Most of the change
comes from soda and fruit drinks.
It's possible that energy and sports drinks could con-

tinue to grow and one day replace all the soda that
people stopped drinking. That's part of the reason
the big beverage companies are investing so heavily
in the new categories. But, for now, those new drink
types are small enough that the decline in soda
has real meaning for many people's diets. And the
industry has an incentive not to oversell its most sug-
ary products: The biggest beverage companies have
pledged to reduce overall calories in the products
they sell by 20 percent in the next 10 years.
33. Few in Venezuela Want Pity the bolívar, Venezuela's currency, named after
Bolívars, but No One its independence hero, Simón Bolívar. Even some
Can Spare a Dime thieves do not want it anymore.
The eagerness to dump bolívars or avoid them com-

pletely shows the extent to which Venezuelans have
13 / 22
lost faith in their economy and in the ability of their
government to find a way out of the mess.
A year ago, $1 bought about 100 bolívars on the

black market. These days, it often fetches more than
700 bolívars, a sign of how thoroughly domestic con-
fidence in the economy has crashed.
The International Monetary Fund has predicted that

inflation in Venezuela will hit 159 percent this year,
and that the economy will shrink 10 percent, the
worst projected performance in the world.
Even as the country's income has shrunk with the

collapsing price of oil — Venezuela's only signifi-
cant export — and the black market for dollars has
soared, the government has insisted on keeping the
country's principal exchange rate frozen at 6.3 bolí-
vars to the dollar.
Mr. Maduro blames an "economic war" waged by his

enemies, foreign and domestic, for the problems. But
most economists say the problems are caused by the
fall in oil prices and the government's policies, includ-
ing strict controls on prices and foreign exchange for
imports.
Today, the bolívar is anything but strong.
34. What Could Raising "Right now, the wealthy pay too little," Hillary Rod-
Taxes on the 1% Do? ham Clinton said at this week's Democratic debate
Surprising Amounts in Las Vegas, "and the middle class pays too much."
Raising their total tax burden to, say, 40 percent

would generate about $157 billion in revenue the first
year. Increasing it to 45 percent brings in a whopping
$276 billion. Even taking account of state and local
taxes, the average household in this group would still
take home at least $1 million a year.
14 / 22
That would more than cover, for example, the esti-

mated $47 billion cost of eliminating undergraduate
tuition at all the country's four-year public colleges
and universities, as Senator Bernie Sanders has pro-
posed, or Mrs. Clinton's cheaper plan for a debt-free
college degree, with money left over to help fund
universal prekindergarten.
"Most economists today would agree that raising

taxes modestly would bring in more revenue"
35. Asian exporters Asian exporters starting to benefit from US Christ-

mas shopping demand, helped by iPhone.
It's never too early to start your Christmas shopping,

and Asian nations are starting to benefit. Exports
from the region are recovering as demand from the
US and other developed economies picks up.
Apple Inc's iPhone 6S release in September

gave Taiwan's exports a significant boost as its
communication products expanded 37.3 percent
month-on-month.
36. Asian economies As China weakens, recession stalks North Asia.

leading to a reces-
sion? As China undergoes a painful rebalancing of an
economy that accounts for 16 percent of global GDP
- it has experiences its weakest growth rate since the
global financial crisis.
Without a doubt, as long as China remains in a very

soft spot ... it's natural that North Asia, which is very
highly oriented to China's market, whether directly or
as a conduit, also takes a knock
37. Australia's CPI and Wage growth is higher that CPI (note that CPI is low)
wage growth
15 / 22
38. Why is Australia's CPI Today's inflation numbers were so low, they took the
low? market by surprise.
They've also put more pressure on the Reserve Bank

to cut interest rates when it meets next week on
Melbourne Cup Day.
Wages are weak, so most domestic costs are sub-

dued, and there's some pressure coming from the
lower exchange rate, so everyone was braced for
underlying inflation to be modest.
39. Economic Growth Australia's GDP has expanded by 3.1% in the 2nd
quarter of 2014 compared to the same quarter in
2013
New Zealand: 0.9% growth in GDP
40. Tariffs US raising tarffs on Chinese solar panels
41. Negative Externality Smoking in Australia around children = second hand

of Consumption smoke = health issues = taxing on government pro-
vided health care / driving a car = pollution
42. Low Interest Rates Japan = 0% (example of Zero Interest Rate Policy)
43. Progressive Tax Rates Australia = ~49% for top income earners
44. Floating Exchange 1GBP = 1.84AUD (October, 2014)

Rate
45. Centrally Planned Communism = Russia up until 1991

Economy
46. Monopoly (competi- Space research (within countries) = NASA in the US

tive branding)
Australia post, possibly Bunnings
Kellogg cereals (great variety)
16 / 22
astro TV
47. Oligopoly (more desir- Music companies = Four music companies control
able) 80% of the US market - Universal Music Group, Sony
Music Entertainment, Warner Music Group and EMI
Group
Computer makers (Apple, Microsoft) OPEC
Coles and Woolworths
Healthcare systems
48. Limitations of Carbon Harms economic growth (US and China refuse)
Tax
49. Perfect Competition Fruit and vegetables

Cabbages, Carrots
50. Monopolistic Compe- Mechanics, books, restaurants, food court

tition
51. Persuasion to Limit Provide cheap public transport (Queensland recently

Negative Externalities decreased public transport fares by 5%)
52. GDP Australia = 1.561 trillion USD (2013)
53. Deflation Sweden = prices fell by 0.4pc in March 2014
54. Inflation Zimbabwe = annual inflation rose in May 2008 to

1,063,572 per cent
55. Free Trade Agree- Australia signed a FTA with Korea in April 2014
ments
56. Protectionist Policies Russia recently raised duties on second-hand car

imports to protect their domestic industry
57. Legal barriers to entry

17 / 22
Ownership to key resources = Alcoa in 1930's, alu-
minium production
58. Cyclical unemploy- The Great Depression of the 1930's, the unemploy-
ment ment rate surged as high as 25%.
59. Positive Production Research and development- developing new tech-

Externality nologies that benefit society or can be used by soci-
ety.
60. Advertizing/Persua- Switching to public transport, less smoking, chang-

sion to limit Negative ing to greener companies
Externalities
61. Low interest rates Japan (0% - 2016)
62. Unemployment rate Hovering around 5-6% in Australia 2016
Hovering around 8% in UK 2011
63. Expansionary Fiscal Failure of expansionary fiscal policy in Greece.

Policy
However, it may not always achieve its intended ef-
fect. For example, consider the situation of Greece.
Any reduction in tax would probably not lead to
increased consumer spending, as people would
be more inclined to save than spend in a reces-
sion. Investment would also be highly doubtful as
it requires business confidence, and Greece simply
doesn't have that from it's investors. Also, govern-
ment spending requires the government to have sub-
stantial funds - or it would require borrowing money.
This could exacerbate an already worsening situa-
tion. Etc.
64. VERs (Voluntary ex- Following the end of the FMA, EU and US asked
port restraint) China to restrict its textile exports.
65. Expansionary fiscal In Greece, because the country runs such a large
policy budget deficit, it cannot afford to prioritise on boost-
18 / 22
ing AD because the cost of further increasing their
budget deficit is too high. Therefore, they are go-
ing against expansionary fiscal policy ( therefore in-
creasing tax, decreasing govt spending during a time
of recession) and it has benefited them :
Greece budget deficit 2009: 15% of GDP
2010: 11% of GDP
2011: 8%
66. Privatizations (making Telstra, Qantas, Commonwealth bank, Public Trans-

government business- port
es private)
67. Nationalisations (mak- 1946- The Bank of England was nationalised.

ing private businesses
government owned)
68. Stagflation (increase 1973- US oil crisis. The 1973 oil crisis began in Octo-
in inflation and in- ber 1973 when the members of the Organization of
crease in unemploy- Arab Petroleum Exporting Countries proclaimed an
ment simultaneously) oil embargo (ban on trade). By the end of the em-
bargo in March 1974, the price of oil had risen from
US$3 per barrel to nearly $12 globally; US prices
were significantly higher. The embargo caused an
oil crisis, or "shock", with many short- and long-term
effects on global politics and the global economy.
However, this spike in oil prices meant that wages
could not keep up, and people lost their jobs as there
was very little supply and demand of oil because of
the spike in price.
69. Indirect Tax GST, Excise, VAT, Luxury, Customs Duty
70. Social Welfare Australia: Centrelink
71. Negative Externality South Africa: Electricity
72. Positive Externality Singapore: Increased Accessibility to Education
73.
19 / 22
Abuse of Monopoly UK: car firms entering into selective and exclusive
Power distribution networks to keep prices high
74. GDP Russia: $14 611.7 billion USD
75. GDP per Capita Nepal: $694.10 billion USD
76. Low UE Malaysia: 3.4%
77. High UE Greece: 23.40%
78. Low and Stable Rate Belgium: 2.2%

of Inflation
79. High Inflation Brazil: 9%
80. Stagflation Worldwide: GFC
81. Inequity of DOI Chile: 0.5
82. Expansionary FP America: American Recovery and Reinvestment Act

2009
83. Contractionary FP Germany: Debt Brake 2009
84. Price floor (Minimum - India min wage ---- 118 rupees per day
Price)
Australian min wage - $17.70 per hour
Minimum wage laws in Australia = $16.87 an hour

Minimum Wage laws in the UK
France: domestic carbon price floor
85. Positive Consumption Eg. Vaccinations (NHS subsidised prescriptions)/

Externality Hybrid cars/ Educations
86. Limitation of switch- Conflict with food (Brazil uses 25% ethanol in gaso-
ing to biofuel line)
20 / 22
87. VERs Following the end of the FMA, EU and US asked
China to restrict its textile exports.
88. Exchange rates 1.5 dollars - 1 pound
1 AUD= approx 0.7 USD
6.3 Chinese Yuan to the dollar
89. Current Account UK 2011 1.9% - Aiming to be in surplus by 2013

Deficit
Australia has a current account deficit of $15,535
million AUD
90. Structural unemploy- The manufacturing industry, for example, has been
ment in significant decline in the United States over the
last few decades. The rise of the service economy,
and then the information economy, has been filling
the vacuum. However, the skills needed in manu-
facturing are not very similar to the skills needed
in a service or information economy, which require
a significant amount of education and technologi-
cal knowledge and skills. Consequently, we see a
lot of people losing jobs as manufacturing leaves
the United States, and these people don't have the
skills to qualify for the jobs that are replacing the
manufacturing jobs. This is an example of structural
unemployment.
The manufacturing industry, for example, has been

in significant decline in Australia over the last few
years. As Car manufacturers such as Ford, Toyota,
Holden and Mitsubishi have stopped manufacturing
in Australia, this means that manufacturing skills are
less demanded whilst other jobs requiring different
skills are more demanded. This means that structur-
al unemployment increases for those previously in
manufacturing jobs.
91.
21 / 22
Expansionary fiscal Because the country runs such a large budget
policy - which govts deficit, it cannot afford to prioritise on boosting AD
go against it and because the cost of further increasing their budget
implement austerity deficit is too high. Therefore, they are going against
measures: GREECE expanisonary fiscal policy (increasing tax, decreas-
ing govt during a time of recession) and it has bene-
fited them :
Greece budget deficit 2009: 15% of GDP
2010: 11% of GDP
2011: 8%
22 / 22

Economics Real Life Examples

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Economics Real Life Examples

Uploaded by

Copyright:

Available Formats

Real World Examples IB ECONOMICS

Study online at https://quizlet.com/_2mdnm2

1. Subsidies China subsidising solar panel production

Australian Government in 2014 subsidised the min-

China: to produce technologically advanced prod-

South Korean government subsidizing domestic

2. Price Ceiling (max U.S. 1970 petrol max price

New York price ceiling on rent for housing and apart-

3. Negative Consump- Cars in London vs Congestion Charge

4. Negative Production Thames polluted = Property Rights granted to

5. Taxing Negative Exter- Pigouvian/Fat/Carbon Tax

The Carbon Tax implemented by the Gillard Govern-

6. Limitation of Carbon Harms Economic Growth (US and China refuse)

8. Reasons for trade Different Factor Endowments: China imports miner-

Increased Welfare - specialization and trade allow

Economies of Scale - with specialization and produc-

Diversity of Choice - trade enables people to access

Increased Competition - Increased competition

Engine for Growth - increased trade helps domestic

9. Quota Eu quota on 20% imported Japanese cars

The ABS said on Thursday the decrease of 5100 in

However, record low interest rates have fuelled ro-

This, in turn, may affect many of the businesses

With the commodity boom well and truly over, Aus-

16. Aggregate Demand - WHILE global financial markets are in turmoil as

19. Unemployment/Trade - Australia's 90-year history of assembling and build-

And that demand — coupled with favourable grazing

It's even been tipped to be as big as the minerals

But Asian consumers love it for slow cooking.

Export sales to China in the 12 months ended Sep-

The Australian dollar has fallen more than 20 per

But Australia's exports into that country are still at

22. Ways to increase em- AS SOUTH Australia's economy continues to strug-

Organisations urging the government to sell off SA

SA Water contributed $300 million a year to the

But SA Treasurer Tom Koutsantonis is not a support-

23. R&D in Singapore's research & development (R&D) efforts

These R&D efforts have also led to improvements

This will enable an integration of all the capabilities

Self-driving vehicles, if developed successfully, could

THEREFORE, growth should come from more

25. Malaysia's Economy Malaysia's ringgit fell to a one-week low on Monday

"The expectations are a bit high about whether

THIS COULD BE DUE TO PALM OIL:

26. Japan's Economy Japan's economy was expected to continue recover-

The BOJ has kept monetary policy steady since ex-

The American cost estimate includes spending on

The Chinese economy is slowing down and it

As well as securing billions of pounds of Chinese

During a tour of China last month, chancellor George

However there are some concerns about China's

In the past 18 months, China has flooded the market

Director of the industry body UK Steel, said: "Chi-

Ministers insist they are powerless to hold back the

Tata confirmed on Tuesday that it is cutting almost

Overall, using the best available data on EU deci-

And they don't just buy more gasoline. They switch

Americans, in short, have not been behaving like the

There is, however, a pretty good explanation for this

Professors Hastings and Shapiro showed that

Moreover, this behavior was prevalent: 61 percent

Sales data at the household level also show de-

It's possible that energy and sports drinks could con-