The latest economic investigations report that the recent earthquake, tsunami and nuclear disaster have led to an economic recession in Japan. This recession may reduce the demand for export commodities from Australia. This may also reduce imports to Australia from Japan. Overall, however, assume that during the last quarter, reduction in exports to Japan is greater than the reduction in imports from Japan. Using the Keynesian model, examine the potential short run economic impacts of the recent Japanese disaster on the Australian economy. When writing your answer assume that there are no other changes have taken place during this period.
Instructions:
1. Read at least two recent newspaper articles published in either the Australian or the Australian Financial Review (or any other news paper) to obtain an understanding of the economic impact of natural disaster such as floods and tsunami. Expand your understanding also by reading various reports published by organizations like Reserve Bank of Australia (RBA), Australian Bureau of Statistics (ABS).
2. Review your understanding of the Keynesian model (particularly, the Keynesian cross diagram) to analyse the economic impacts of changes in net export earnings (NX).
3. Your introduction should be concise. This should include a very brief overview of the trade structure between Australia and Japan with changing patterns (if any) and recent trends. Provide some data if available (data table/s or figure/s should be included in an appendix ).
4. No headings are required. Use separate paragraphs for the introduction, the main body of the analysis and discussion/conclusion.
5. Include properly labelled diagram/s to explain your answer.
6. In the reference list include at least five references e.g. news paper articles, books (including your textbook). Use any particular referencing style and be consistent. If you think that you need more details about referencing, visit the referencing website of the university.