Welfare economics uses a microeconomic approach, it is a way to evaluate individual well-being and how decisions are made to allocate resources. It applies itself to a market economy where consumers are free to buy and sell. Microeconomics examines how behaviour and decisions affect supply and demand, which ultimately determines price. The main advantages of a market economy include;
-Increases in efficiency and productivity.
-A higher GDP.
-More money spent on social/community programs.
The biggest advantage that a market-oriented economy enjoys is the determination of a unique price determined by the demand and supply in absence of any monopolistic influences. Prices also have the function to allocate and distribute a country’s resources.
A market economy aims to provide complete efficiency bringing about the optimal distribution of a country’s resources. Realistically, prices are never going to be totally stable and any volatility can harm people living below the poverty line or those in the low income group. It is impossible for them to pay high prices in cases of demand shortage.
2. Outline the main policies that Governments can adopt to promote a sustainably higher level of economic activity. Discuss the implications of these policies for the welfare of disadvantaged members of the community.
To drive Australia’s economic activity and to increase Gross Domestic Product (GDP), The Australian Government is concerned about 3 main areas. They are; Population, Participation and Productivity.
Australia has an ageing population with our life expectancy much greater than what is was 50 years ago. Along with an ageing population, Australia’s birth rate has also declined. With these issues in mind the Australian Government has adopted policies to counteract these issues.
Over the last decade, Federal Government has demonstrated support for high level immigration. Australia's migration policy reflects the national interest for...
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