Manner in Which Tour Down Under Has an Impact on the GDP, Production, Pricing - Case Study Example

The changes in the economic environment has an impact on the economy and it further gets affected by the sudden changes in events or other forms which thereby impacts the overall performance of the economy. The paper explores the manner in which Tour Down Under has an impact on the GDP, production, pricing, employment and other economic variables. This will thereby help to understand the relationship and the changes which the economy is expected to feel and the manner in which the overall changes will have an impact on the performance. South Australia will witness a growth in the Gross State Product as an event will look towards attracting people towards the sport. This will consist of both people belonging to the native country as well as foreign country. This will thereby have an impact on the aggregate demand as additional people would mean increase in the total consumption of goods and services. People will be looking for places to stay, food, vehicle and so on. This will thereby have a positive impact on the demand and will increase the demand in the short run. To meet the demand for the goods and services more of the same will be required (Colell, Winston, Michael & Jerry, 1995). Since, it is not possible to make changes in the supply chain in a short period of time as most of the factors of production are fixed and requires time to be changed which will thereby result in an increase in prices. This is primarily due to the fact that the economy is witnessing more money chasing fewer goods and will thereby have an impact on the prices as it will increase. This has been shown below The above chart shows that in the short run a change in demand results in an increase in price as the supply is not able to grow in the same proportion to meet the demand. This makes the prices of the goods and services to rise rapidly as shown in the above graph where the price of the product and services has considerably increased. Further, the increase in demand hasn’t allowed the supply to increase as per the demand in the short run which has created a gap and thereby impacted the price of the product by pushing it higher (Docters, Schefers, Korman & Durman, 2008). The overall effect has been such that the Gross State Product has grown due to increase in demand and change in the total consumption pattern but has also resulted in an appropriate increase in prices of goods and services. The changes in the prices will thereby have an impact on the real wages that the employees receive as increase in the prices of a product would mean that the purchasing power of money reduces. This would make good and services expensive and will thereby reduce the real wages that the employees receive. Since, real wages is calculated by finding out the actual buying potential of money and includes the manner in which the buyer capacity reduces due to changes in inflation. Since, the period which is considered is short run so the impact will be largely limited. This is shown below The above chart clearly highlights that changes in the price level has an impact on the production function as increase in prices results in inflationary conditions which thereby increases the total cost as employees start to demand more wages. But, since the impact is for a short term so the changes in prices won’t have a high impact on the overall production function and will thereby contribute positively towards the Gross State Product. The changes in the prices will have some impact on the level of employment. The situation which demands more and more people to work for the Tour Down Under event will look at attracting more and more people as employment opportunities will be generated. This will have a positive influence on the people as it will aim at providing better employment opportunities and will thereby attract more and more people towards the job. This will thereby ensure that the employment level goes up and the unemployment level falls. But since the economy at that situation is also witnessing an effect of inflation due to price rise it will have a negative impact. Since, the real wages of the employees will fall it will make people refrain from working or looking for some other altrenatves which will help to improve their real wages (Mayerhoefer & Zuvekas, 2008). This will thereby reduce the employment level and increase the unemployment which the economy is witnessing. The overall effect of the situation will thereby be determined by the relative strength of the increase in price and the changes in real wages which the employee is witnessing. The increase role of the government through investment in the Tour Down Under will have a positive impact as it will help to improve the overall changes in the Gross State Product positively. Increased investment especially in the infrastructure from the government will have a positive impact as investment will help to generate additional opportunity for employment. This will act as one of the factor which will help to increase the use of the factors of production and will thereby help to contribute positively towards the Gross State Product. Increase in infrastructure investment would mean that the government would require more factors of production to carry out the different activities within the economy. This will thereby help to generate an additional demand for all type of products like employees, heavy metals, equipments, machineries, and so on. This will thereby have a positive impact as it would mean that the economy will find additional opportunity to use the resources and will thereby help to contribute positively towards the growth rate. Further, the money multiplier effect will come in effect as it will help to multiply the value of the final currency. The fact that the phenomenon is aimed at improving the overall condition and ensuring that the multiplier effect provides better opportunity to improve the business will thereby help to ensure that the long term prospect of the business multiplies (Shepherd, 2006). This will contribute positively towards the Gross State Product as it will help to provide additional value and will ensure that the resources are used in the most productive manner. The overall effect will thereby aim at ensuring that the productivity increases and will provide more opportunities to use the different resources and will thereby contribute positively towards the Gross State Product of the economy. The loanable fund model is a model which has been developed to bring the borrower and the saver of the money to come in contact with one another and both of them look to incur into a transaction at an interest which is determined by the market forces of demand and supply. A situation where a government deficit is created in the market due to additional investment being made by the government in the direction of investment will lead towards increasing the supply of money which will thereby reduce the interest rate as the supply of money within the system will increase. This will create a situation where the society has more people saving money primarily due to the fact that additional income which has been earned by the employees won’t be entirely spend and some proportion of the income will be saved. People who have saved the required money look to find out the different avenues to invest in the market and will create a demand for the money within the market. This situation will turn out as one where more and more people are saving and are willing to invest in different securities or investment avenues which will improve their return in the future. This will thereby lead towards more savings than the demand which would ensure easy availability of finance for the people. This situation will turn out in a way where people find easy access to loans and will thereby reduce the interest rate and ensure easy availability of finance (Garg, 2010). The entire situation will be such that a mismatch will be developed in the market which would lead towards a decrease in interest rate. This has become entirely due to increase in the government investment which has thereby led to a situation where people are able to save more and hence lend more. The essay thereby analyzes the different economic variables and the impact it will have on the industry due to changes in different economic variables which has an impact on the overall performance. The paper explores the manner in which Tour Down Under has an impact on the GDP, production, pricing, employment and other economic variables and shows that certain factors will contribute positively whereas some will also have a negative impact on the economy and will bring the required transformation through which the economy performs. References Colell, M., Winston, A., Michael, D. & Jerry, R. 1995. Microeconomic Theory. 3r Edition, New York, Oxford University Press, Pearson Education Docters, R., Schefers, B., Korman, T. & Durman, C. 2008. The neglected demand curve: how to build one and benefit. Journal of Business Strategy, Volume 25, issue 5, pp. 19-25 Garg, S. 2010. Microeconomics: Introductory. 7th edition, pp 3.11-9.17, Dhanpat Rai Publication Mayerhoefer, C. & Zuvekas, S. 2008. The shape of demand: what does it tell us about direct to consumer marketing. The B.E. Journal of Economic Analysis & Policy, Volume 18, Issue 2, pp. 4-8 Shepherd, G. 2006. Vertical & Horizontal Shifts in demand curve. The Econometric Society, Volume 4, No. 4, pp. 361-367 Read More