Domestic Economy Over The Foreign Markets â€Myassignmenthelp.Com

Question: Discuss About The Domestic Economy Over The Foreign Markets? Answer: Introduction Imports are goods and services that are received by a country for consumption from foreign countries whereas exports are goods and services produced by a country and transported outside to foreign countries (Choudhri Hakura, 2015). They are some of the key elements that are used to measure level of countries international business, this is according to Lewis (2015). Exports play important role in the growth of an economy as well as imports. Economic development of the country is adversely affected by decreased exports. Exports create employment and as a result help in boosting the economic growth. The import price index gives the measure of the monthly price changes of goods and services the Australian residence purchase from the foreign countries. On the other hand, export price index gives the measure of the changes in the monthly prices of goods and services the Australian residence sell to foreign countries Tsai (2012). In the data set, the price indexes had been collected for q uarterly years where they were obtained from four quarters in a year. Analysis of data Year Import price index Export price index 2000 429.3 218.9 2001 454.1 240.8 2002 432.9 233.7 2003 398.3 215.0 2004 376.2 222.8 2005 380.2 254.1 2006 395.9 293.6 2007 380.1 295.3 2008 414.7 369.1 2009 414.5 344.3 2010 392.3 357.7 2011 394.4 402.9 2012 400.3 371.3 2013 409.5 369.4 2014 422.9 355.8 2015 427.2 322.9 The most appropriate graph for use to represent this data is line graph. The trend for import and export price indexes can easily be visualized through this type of chart within a continuous period of time i.e. in this case from the year 2000 to the year 2015. Line graph is known for its suitability in representing time series data as contained in the continuous variable (year) in this case to ensure the accuracy of the representation (Bereman et al, 2014). Unlike other graphs, line graph is capable of clearly showing the trend which can thus be used to predict as from the trend the future phenomenon that have not yet been recorded (Dremann Tsatsaronis, 2014). Being that we had three variables (Import, Export price indexes and Year), according to (Freitas et al, 2014), line graph offers the representation of several dependent variables (import and export price indexes) on the same graph against one independent variable (year) for easy comparison. From the presented data in the graph, import price index had been higher than that of export price index in Australia. Import prices were higher in the year 2000 and 2001 where the import price index took a decreasing turn and almost remained constant from 2004 to 2007 at the lower end. The prices fluctuated and rose in 2008 and 2009 then dropped in the following years up to 2012. Since then, a gradual increase has been experienced in the import price index as indicated in the graph until 2015. In the year 2000, Australia had the low export price index. A slight increase in the export price index was observed in 2001 and 2002 where later in 2003 the export price index dropped and almost remained constant through to 2004 with an infinitesimal increase. The export price index has since 2005 shown a sharp increase though not uniformly up to the year 2011 where the export price index was almost equal to import price index. In the following years after 2011, the export price index has been on the fall till 2015. Countries have been managing their operation and survival from what they do not produce by depending particularly on importation of such goods and services. One of the most imported goods in Australia are machinery and transport equipment that covers a total of 40 percent of the entire imports in the country (Kehoe Rhul, 2013). From 2000 the imports rate were high but the trend in the past years up to 2015, there have been gradual drop of the importation leading to low import price index. The decrease seen in the imports in Australia is due to low consumption of imported goods and services which then discourages the suppliers from increasing the supply of the same products. In 2017 capital goods such as telecommunication dropped by 4 percent where other capital goods such as aircraft and confidentialised items fell by 41 percent. Low consumption of these products from the foreign countries by the locals is a major factor to the decreasing trend observed in the import price index. Ap art from the capital goods, another category of goods imported in Australia are consumption goods. They are also reported to have faced a drop by 2 percent as a result of decreased importation of textiles, clothing and footwear. Toys, books and leisure goods dropped by 5 percent. Countries that are solely depended on for imports are mainly China that covers largest proportion of the total imports at 23 percent, followed closely by the US at 11 percent, Japan comes the third in supply of goods and services to Australia by 7 percent and lastly, South Korea, Germany and Thailand forms 5 percent of the total imports in Australia each. Even though goods have been seen dropping in their import to the country, the levels of imports still remains high as compared to exports due to increased importation of maintenance and repair services that still stood at 20 percent accounting for the increase in importation of services by 1 percent. Global demand and Australias ability to fit and compete favorably in the international market is one of the key factors that have led to increased export and the export price index in the country. Australia is one of the major exporters of resource commodities (i.e. wool, natural resources, energy, live animals, fresh fruits e.t.c) but they later come to face competition from Asia in the past ten years but the fall in the export price index is as a result of the appreciation of the rates of exchange which had the decreased effect on export revenue in relation to domestic production cost (Atkin Connolly, 2013). The economic slowdown experienced in the globe in the past recent years have resulted to the gradual drop in exports in the major markets and this could be seen affecting the export price index hence showing a declining trend from 2011. The fall was largely experienced for the exports to the US and Japan. Comparing the rate of imports and exports using the provided data for the import and export price index, the import price index was higher than that of the export price index in Australia for the period 2000 to 2015. This showed that the country has a trade deficit that would be mild to the growth of the economy in the near future if the trend continue. Since imports represent an outflow of cash from the country other than pumping more cash, it tend to drag the economy growth as could be shown in the determination of the GDP (Plumb et al, 2013). Increased import therefore would result to adverse effects to the state of economy since all the benefits will be transferred to the overseas entities. However, not at all time imports are insidious to the growth of the economy. In some cases, they tend to show robustness of the domestic demand and thus indicate that the economy is growing (Athukorala Kophaiboon, 2011). Being that the leading imports in Australia was machinery and transport equipment, they are vital in helping to maintain the production to meet the demands in the market and in the process create employment thus improving the economic growth. Growing exports show healthy economic growth. The continuous fall in the exports as indicated by the export price index in recent past years in Australia with the slight increase in imports is an indicator that better domestic economy than overseas markets. The continued trend therefore would mean a better domestic economic status that would be conducive for the domestic business activities. Conclusion In conclusion, both the exports and imports are important in the economic growth of any given country. Importation of machinery products that are used in production of goods and services is important in the support of the wellbeing of the economy. Growth of both imports and exports is a clear indicator of a thriving and healthy economy. Australian economy being that it has the rates of import higher than that of the exports that would result to a negative export figure portraying that the nation had a trade deficit. From the graph, it would be seen that the export rates had been reducing since 2011 through to 2015 with increase in imports as indicated by import and export price index. High levels of imports in this case indicate huge domestic demands of a growing economy. The sharp export fall and increase of imports from the year 2011 to 2015 shows that Australian domestic economy was performing better as compared to the overseas markets. The state of business operation in Australia can therefore be assumed to be even better in the coming years should the trend continue in the same manner. Ai) mean = Median of 0 0 0 0 0 1 1 1 1 1 1 2 2 3 5 Median position = th position Therefore, median = 1 Mode = 1 Mean = Median of 19 29 33 36 38 42 45 52 60 Median position = th position Therefore median = 38 Mode = 19, 29, 33, 36, 38, 42, 45, 52 and 60 Mean is the most common value that can be used to determine the center in a numerical data set. As well, the median value is also concerned with determining the value at the middle of the data set whereas the mode gives the more frequent value in the data set. All the determined values in part (i) are all values of central tendency. Reference Athukorala, P. C., Kohpaiboon, A. (2011). AustralianThai trade: has the free trade agreement made a difference?.Australian Economic Review,44(4), 457-467. Atkin, T., Connolly, E. (2013). Australian exports: global demand and the high exchange rate.RBA Bulletin, 1-10. Bereman, M. S., Johnson, R., Bollinger, J., Boss, Y., Shulman, N., MacLean, B., ... MacCoss, M. J. (2014). 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