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Assignment 1 / Assignment 2
Program / Intake : BSc44
Economic Policy and the Global Environment
Mr Rodney Sim
I hereby declare that the attached assignment is my own work. I understand that if I am suspected of plagiarism or another form of cheating, my work will be referred to the Academic Registrar/ or the Board of Examiners, which may result in me being expelled from the program.
Student signature: ____________________________ Date Submitted: _______________________
National University of Ireland, Dublin
Bachelor of Science ( Management )
Module name: Economic Policy and the Global Environment
Module Code: FIN2001S
Lecturer: Mr Rodney Sim
Assignment type: Assignment 1
Submitted by: Jasmine Tan
Student Number: 13207730
Word Count: 1400+
Submission Date: 02/12/13
Introduced with a new economic policy “Abenomics” by Japanese Prime Minister Shinzo Abe, Japan climbed her way up to the global economy with new measures known as “The Three Arrows”. Aiming to revive Japan’s slow-moving economy, Abe focused on boosting the Gross Domestic Product (GDP) growth, raising inflation and minimising unemployment level. These will be explained using the Keynesian theory originated by the English economist John Maynard Keynes, 1883-1946, an approach which Japan believed that using government spending can improve the economy growth without consumer spending or investments in businesses. In this article, economic issues faced by Japan during the post war period will be discussed in prior to highlight the impact it had on Japan’s current economy stability and how the government overcame the obstacles. These will be clarified using the Aggregate Supply, Aggregate Demand model (AS-AD). Japan and United States (US) economies are tied closely together, thus the author will further highlight the importance of how US economy played a part in supporting the economic policies Japan implemented throughout the years.
Japan economy during post war period
Japan had a rapid and sustain growth in economy during the 1960s to 1980s, mainly with the expansion and development of heavy and chemical industries. Figure 1 shows the connection between GDP growth rate and per capita GDP across a sample of 119 countries. Japan was within the top few in the graph, showing high income per capita together with the other seven high performing Asian countries (HPAEs) – Singapore, the Republic of Korea, Hong Kong, Taiwan, Malaysia, Indonesia and Thailand.
Japan's labour force contributed significantly to economic growth because of workers’ knowledge and their practical salary demands. The well-educated and skilful labour force, remarkable savings rates and investments, and the low growth of Japan's labour force were main points that contributed to the high level of productivity growth. From the late start of 1980s, Japan’s economy went downturn due to rumours on the stock and property prices. Low interest rates were also one of the major factors that contributed to the decline. The government soon realized the problem and raised the interest rates as a solution expecting to recover the economy. However, due to the increased interest rates, many businesses and financial institutions were unable to pay off the debts they owe. This resulted in price deflation as citizens decrease their spending due...
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