Market Prices

reach) and price floors (where the market price has a minimum that it can reach). The main reason for influencing prices in this way is to affect the distribution of income. Price ceilings will redistribute money from sellers to buyers, whereas price floors will redistribute money from buyers to sellers. I believe that we have a coherent government, and sometimes people are too quick to be critical of decisions made. The Government can intervene in Market Prices, however, sometimes large measures are needed to be taken in order for the Government to realise that intervention is needed. Example: Protests. An article that supports this is theory is from 'The Age' called "Call for federal intervention on wool boycott" by Lorna Edwards (March 12, 2008). This article examines the European boycott of Australian wool. This boycott, has lead to low prices for wool. However, the Australian's that are producing this wool can not afford to sell it at such low prices. Thus, one of the world's largest wool traders has called for urgent Federal Government intervention to stop the price of wool collapsing as the European boycott of Australian sheep worsens. This has happened in the past, when the Government intervened with the market price of wool. The Australian Government bought the wool at the price floor. However, this was not the best option for the Australian Government. This resulted in the Government owning many warehouses containing bails and bails of wool. The Government can also intervene by implementing economic stabilisation policies. These are called macroeconomics policies. These policies aim to help the economy maintain a sustainable rate of economic growth. Example: Fiscal policy, Monetary policy. Overall, I believe the Government can intervene, and often does. On the other hand, sometimes measures are needed in order for the Government to take the action needed.