The basic economic problem of scarcity is faced by all countries and involves choice: what to produce, how to and how much to produce and for whom to produce. Scarcity is; unlimited wants but limited resources. Each country and economy approaches these questions according to the way in which the allocation of resources of production and distribution is organized. Most economies today except for subsistence economies are a combination of a market and planned system such as Australia and Greece. A market economy is where the government does not get involved and resources are distributed based on supply and demand where there is a profit motive. A planned economy sees government involvement. Majority of economies in the developed world have some level of government intervention even if they are market based. The Australian and Greek economic systems are a mix market economy where the economy is based on supply and demand with some government influence. Both can also be called capitalist economies which are “based on private ownership of capital” (Dictionary.com, 2014). Australia and Greece both share economies which have some government intervention but for environment purposes as well as safety. The government intervention in Greece has certainly increased due to the current financial difficulties they face. Previously the government had very little involvement but that has increased in terms of taxes and financial matters to boost income and pay off the incredibly severe austerity measures.
Australia fared well during the Global Financial Crisis (GFC) because of their advantage in the export of primary products and their large supply of agricultural and mineral sources (Trading Economics, 2013) which was sought after highly by the Chinese because of their constant want for resources. Simply, Australia had no debt before the GFC. Australia’s economy had manageable inflation, little public debt and a low unemployment at less than 4.5% (Trading Economics, 2013) when the GFC hit, which also helped their chances of getting out relatively ‘unscaved’. Australia continues to feature these optimal aspects of their economy, which lets the economy grow and prosper even in tough times financially for many countries around the world. As shown in Figure 1.2, Australia’s inflation rate has been steadily growing at currently 2.7% since the big low in July 2012 (Trading Economics, 2014). Developed countries such as Australia aim to have their inflation between 2-3%.
Greece’s economic situation faces crisis as for many years they have lived beyond their financial constraints even before they joined the euro where public sector salaries soared faster than other member countries of the euro (BBC News, 2012). This long period of overspending hit a wall when the budget deficit skyrocketed. The Greek government tried to conceal this with hidden borrowing but when the GFC hit, the country couldn’t cope and from then on had to ask partnering countries and the IMF for large loans adding an extra burden to their long list of woes. Now that Greece is in trouble, more government influence is taking place than when the large spending just a few years ago was taking place, where there was little input in the Greek people’s lives. Greece’s inflation rate sits at -1.5% (Trading Economics, 2014) because of the currently unstable economy, it is causing people to only be spending consistently on essentials such as food and not buying luxuries such as cars and computers, causing a declining inflation.
Australia is located south of Papua New Guinea in between the Pacific and Indian oceans. Its population is rising which currently is at 23 403 811 due to its constant increase in migration where in 2012 saw a 60% net overseas migration rate for the overall growth of the population (Australian Bureau of Statistics, 2014). The Australian government encourages legal migration and plans to accommodate for the