Cost_Infaltion_Assignment_ENG

Welcome to Eugene's Page :)! Lowering Tariffs   __**Microeconomics**__
 * 1) is a branch of economics that studies the behavior of how the individual modern household and firms make decisions to allocate limited resources.
 * 2) Typically, it applies to markets where goods or services are being bought and sold.
 * 3) Microeconomics examines how these decisions and behaviours affect the supply and demand for goods and services, which determines prices, and how prices, in turn, determine the quantity supplied and quantity demanded of goods and services

here is a video to explain what is microeconomics: [|What is Microeconomic?]media type="youtube" key="I2GH1MESQ5w" height="286" width="412"

__The term **microeconomic reform** __ - these microeconomic reforms from above can help to contain inflationary pressures, and now specificly on Lowering Tariffs in Australia!
 * refers to policies directed to achieve improvements in economic efficiency, either by eliminating or reducing distortions in individual sectors of the economy or by reforming economy-wide policies such as tax policy and competition policy with an emphasis on economic efficiency, rather than other goals such as equity or employment growth
 * example for microeconomic reforms are:
 * Improved Government efficiency
 * lowering tariffs
 * deregulation of the labour market
 * deregulation of the financial sector
 * tax reform
 * competition policy

**__pervious history on microeconomic reform in Australia: __**

<span style="color: #171212; font-family: 'Comic Sans MS',cursive; font-size: 120%;">//Microeconomic reform dominated Australian economic policy from the early 1980s until the end of the 20th century. The beginning of microeconomic reform is commonly dated to the floating of the Australian dollar in 1983. The last major policy initiatives associated with the microeconomic reform agenda was the package of tax reforms centred on the Goods and Services Tax (GST) which came into force in July 2000, and the privatisation of Telstra which began in 1998 and was completed in 2006.//

<span style="color: #171212; font-family: 'Comic Sans MS',cursive; font-size: 120%;">//There were, however, some instances of microeconomic reform before the 1980s, notably including the Whitlam government’s 25 per cent tariff cut. Similarly, the consequences of some microeconomic reforms initiated in the 1990s, such as National Competition Policy are still being worked through.//

__<span style="font-family: 'Lucida Console',Monaco,monospace;">here is a summary from Australian APEC Study Centre Issues Paper 17 about tariffs. __

<span style="font-family: 'Comic Sans MS',cursive; font-size: 120%;">//<span style="font-family: Verdana,Arial,Helvetica,sans-serif;">Australia should reduce its general tariff rate to zero by 2005. This would improve the Australian economy, consolidate the global competitiveness of Australian manufacturing, and restore credibility to the Government's tariff policy. Such a commitment would enable the goal of securing an open global economy to be restored as the leading goal of Australian trade policy. Trade policy has become primarily focussed instead on securing greater market access, presumably because of unwillingness by the Government to commit openly to further trade liberalisation. This is leading to policies in APEC and the WTO which are contrary to Australia's economic interest. //

<span style="font-family: 'Comic Sans MS',cursive; font-size: 120%;">//<span style="font-family: Verdana,Arial,Helvetica,sans-serif;">If the full benefit of fresh commitments to liberalization is to be secured, the government should also agree to determine this year the rate of reductions of tariffs in the automobile sector and clothing and textile sectors in the period after 2005. Australia cannot effectively pursue its trade interests in the WTO or APEC while doubt remains about its long-term attitudes to protection in those sectors. //

**[|How The Tariffs Work] <- this is a video to show you how the tariffs work, and it is actually helpful even though it is bit long (7mins).**

How does it actually work?

//<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 120%;">﻿Well, //
==== //<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 120%;">when the tariffs have been reduced to zero by 2005, it actually can increase the businesses' competitiveness in Australia, because in other words, that means the companies can have a decrease in cost of production, whereas they have more ability to reduce the selling price but still remain the same profit margin. // ==== ==== //<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 120%;">By providing a product in a lower price can enable the competition in the particular industry, other companies will try to match the average price in the market, and therefore the price will be decreasing when the tariffs are lowered. // ==== ==== //<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 120%;">When the supply side doesn't have any pressure on producing more and more products in order to meet the market's demand, the prices will fall and allows firms to reduce the selling price and yet still remain the profit margin. // ====

====<span style="background-color: #000000; color: #ffff00; font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 120%;">//However, lowering tariffs may cause something bad in other hand, while the competition against foreign companies will be increasing for the local Australian firms. Overseas businesses can enjoy a free tariff to enter Australia's market, whereas it will increase the level of competition in the economy.// ==== ====<span style="background-color: #000000; color: #ffff00; font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 120%;">//This will lead to an increase in unemployment rate and people are losing their jobs, in other words, dont have enough money to purchase goods and services and finally leads to a decrease in economy growth in Australia.// ====