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Microeconomic Reform


As apart of Economics 3AB syllabus Western Australia
Mind Map by Nikaylasia, updated more than 1 year ago
Created by Nikaylasia over 6 years ago

Resource summary

Microeconomic Reform
  1. Definitions
    1. capital widening ^labour force > ^capital equipment
      1. capital deepening ^capital:labour ratio
        1. disembodied change intangible e.g. management + education
          1. embodied change tech e.g. NBN
          2. MER: gov actions which \/ / remove barriers to efficient resource allocation to enable gov to achieve macro objectives
            1. Structural Change - ongoing process of C + distribution patterns in economy, occurs naturally over time
              1. e.g. tech change + growth of east asian markets like CHINA
                1. MER ^rate + effectiveness of structural change. Aus is open trade economy - must meet tests of i/n markets, offering \/price, ^quality goods to dev export+import competing industries
                2. Producivity - relationship b/w inputs needed to produce amt of output/time
                  1. labour (output/labour input)/time
                    1. capital (output/capital input)/time
                      1. multifactor (output/multifactor input)/time
                      2. Efficiency
                        1. technical - producing output w minimum average cost
                          1. allocative - firms charging prices to reflect marginal cost of prodn > resources allocated to reflect customer preferences
                            1. dynamic - ^adaptability to changing econ conditions using latest cost\/ tech to meet consumer preferences
                            2. Overseas Market
                              1. trade liberisation - \/tariffs + subsidies
                                1. FTA e.g. China, SKorea
                                  1. freedom i'n m'ment capital e.g.FI
                                    1. manufacturing idea > comparative adv
                                    2. Imact on economy
                                      1. PRICE STABILITY - \/avg costs of prodn+comp markets > \/prices
                                        1. FULL EMPLOYMENT - ^growth rates>^labour demand+\/cyclical unemployment
                                          1. HOWEVER reform>structural unemployment>re-training required to avoid long term unemployment
                                          2. ECON GROWTH (inflation less) bc ^productive capacity
                                            1. EQUITABLE Y DISTRIBUTION - welfare>work _ ^econ growth>^gov fin ability to provide support to low Y earners
                                              1. EXTERNAL STABILITY - consistent \/inflation rate>^i'n comp + ^capacity > ^X volumes
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