The Economic Problem and how it Affects Society

Resource Use Define the economic problem. Explain how individual consumers, business firms and the government are all faced with the economic problem. Identify the different economic factors that influence how each group seeks to address this problem. The economic problem occurs because of the fact that the supply of resources used to produce goods and services are limited or finite but there is an infinite amount of demands and wants of individuals. In other words, …

…Bank can also act as a regulator and can dramatically alter the direction of an economy. The Reserve Bank can raise and lower interest rates which influences domestic saving and investment, and also affects foreign investment. For example raising interest rates would encourage foreign countries to buy Australian dollars to capitalise on the interest of their investment. The government has some bearing on the actions of the Reserve Bank, however its influence is quite minor.