Question

1. The Australian Prime Minister recently announced measure to help the economy from the Covid19 pandemic. The Australian government have introduced a financial grant for people to build their first home. The grant is worth $25,000. The owners must live in the house once its completed, and they must use local workers to build the house. How do you think this will help the Australian economy? Be specific, and provide examples in your answer.

2. Consider an economy. The growth rate of nominal GDP in the recent year was 8% and the growth rate of real GDP was 5%. What does such difference indicate? What do you think the government of this country should do next year?

3. There is a lot of construction happening in Bangkok Metropolitan area these days, both residential property and business objects are being built. Explain how they affect GDP now and how they will contribute to Thailand’s GDP in the future. Specify the elements of GDP they affect.

Answer 1

Answer:

According to the question The Australian Prime Minister recently announced measure to help the economy from the COVID-19 pandemic. The Australian government have introduced a financial grant for people to build their first home. The grant is worth $25,000. The owners must live in the house once its completed, and they must use local workers to build the house. There are two important things that are - Finacial grant and use of local workers. Here the government has implement this strategy with some conditions like- financial grant for people to build their first home limited to the worth of $25,000, te owners must live in the house once its completed, and they must use local workers to build the house. so, this a part of government spending that will give the finacial support to the people and creat new job opportunities. It will increase the income level of the people in Australia and also help to the housing market. When it will increase income level then it will incraese consumption or spendable income of people and increase AD. Increasing AD incraese output and price level. Increasing price level boost production level and it will decrease unemployment and increase income level that will increase AD further. These all process will help to the economy and the economy will move forward fast. You can see the same stategy that is adopted by the Indian government few years ago that is also exist. According to this plan the government provide the grant worth of INR1.5 lac to the every people of the weaker section of the socirty that has helped them to spend thier income in another productive activities. During the last 10 years the the % of people who is living under poverty have decreased rapidly.

Nominal GDP is the monetary value of all finished goods and services produced within a country during a specific time period and other side real GDP is inflation adjusted GDP. When inflation increase than GDP growth rate its decrease real GDP and vice-vers. I think the government should control inflation though decreasing spending and imposing taxes more. Or to decrease spending only. When the government will control inflation then the gap between real and nominal GDP will decrease.

According to the question here is a lot of construction happening in Bangkok Metropolitan area these days, both residential property and business objects are being built. Home sales usually indicate the economy's health and rise and fall with economic activity. During the economic downfall money becomes harder to borrow, fewer home buyers enter the housing market and vice-versa. When economy grow, housing market also grow. People can borrow easily during the good phase of the economy. If money is cheaper then its increase the demand for home rapidly. You will have seen the same thing before the 2008-09 crisis. During a good phase of the economy, the income level of people rapidly, loans are easily avilable and people have more paying capacity that increase demand for housing property in the market. Increasing demand increase price level that increase supply of housing property also. If Housing market grow fast then it incraese the income level of the people in the form of the rent, appreciation etc. It incraese the job and bussiness opportunity in the economy that decrease unemployment level. So, increasing income level increase AD that incraese output level and price level both. So, Increasing construction of the both residential property and business in  Bangkok Metropolitan area will increase income level and GDP and in the future its decrease unemployemnt, inflation and standard of living of the people that increase HDI of the country. So, in the long-run it will boost the economic development of the country. But at the same time the government should smartly watch the financial market otherwise it can convert into a bubble like the USA and it will affect the economy worst. The government should taking care about the lending policy, lending amount, banking policy, inflation and maintain atransparent and sound lending market or financial market.