Indescribable;;

Sunday, September 10, 2006: more last words

okay thats it. the computer is too luring. i've decided to be productive and combine the use of BOTH my computer and the desperado desire to blog with what i absolutely have to do, i.e. study, together. boy. i am smart =D you can ignore this post and i'm making it white so its easier to skip. (:

okay. so i have to study microeconomic reform.
define MER: all government policies that reduce institutional and legal barrieres to efficient resource allocation
how does MER work? MER is a deliberate attempt to increase the pace of of structural change. because of the '70s Australian economy, where firms and enterprises were protected, inefficient and unproductive, the Government had to implement some sort of policy to undo this. MER opened up the australian economy through a series of policies and reforms, which introduced competition to the market, reduced reliance on the government and floated the dollar. competiton forces firms to reduce costs of production so that consumer prices fall.
MER causes:
1. efficiency through competition - technical, dynamic, allocative
2. reduction in cyclical unemployment (may cause temporary structural unemployment)
3. reduces the CAD because firms borrow less as they become more efficient hence reducing interest payments on debt (net income)
4. maintains price stability - companies and firms are forced to produce at low costs, hence passing on lower prices to consumers (price competitiveness), which in turn results in a low inflation environment (cost-push)
5. raises international competitiveness in Australia - imported g&s are cheaper (especially from china), hence domestic firms have to compete with those prices. promotes efficiency.
HENCE meeting government objectives of economic growth, full employment, price stability, external balance and efficiency.

this causes a shift in the AS curve to the right - firms produce more at a lower price level. this can also be illustrated by a outward movement of the PPC because the capacity of the economy has expanded. this also allows for the increases in AD.

examples of MER in australia:
1. tax reform
2. financial deregulation
3. labour market reform
4. public sector reform
5. tariff reform
6. corporatization, privatization
- all of which mainly is to promote competition and efficiency, as well as incentives for being productive.

okay. i think thats about it. i only need to understand how tax affects the economy structurally.. gah. rehana reminded me last night that i have a check point tomorrow.. !&$(!*#^$&!!! luckily she told me yesterday. my gosh. there was once where i didnt know we had a test but luckily it was on tax so it wasnt that bad. i finished the essay. so that was a hiphooray moment. (:

a shout of praise.
2:53 PM