Supply and Demand Aggregate - 956 Words

Supply and Demand Economic Critique Rachel Middlebrook ECO/372 February 4, 2014 Rick Pretzsch Supply and Demand Economic Critique The United States economy is determined by a number of factors, such as; gross domestic product (GDP), unemployment rates, consumer income, and interest rates. Everything the U.S. produces is measured by the GDP. When the GDP turns negative, the economy can enter a recession. If this negative GDP continues for years the country is considered in a depression. Supply and demand are the forces drive the U.S. economy. Supply includes employment and natural resources such as oil. Demand, or personal consumption, drives 70% of the economy. The current spiral of the United States economy can be attributed†¦show more content†¦The Consumer Confidence Index is watched by stock market analysts and investors to get an idea of whether consumer spending will continue to drive the economy. The U.S. is also facing income inequality, one-quarter of Americans make less than $10 per hour, and this is income below poverty level. Many lower wage workers receive no health insurance, pension plans, no sick or vacation days. Recent government tax policies have helped rich investors more than the low wage earners. Technology and outsourcing has increased inequality. Emerging markets of other countries are seeing increases in their income as they become more competitive in the global marketplace. Overseas work forces are becoming more skilled and sophisticated in managing their economy; as a result, wealth is shifting to those countries. Interest rates control the flow of money in the economy. High interest rates curb inflation, but also slow down the economy. Lower interest rates stimulate the economy, but could lead to inflation. Americans must know whether rates are increasing or decreasing, and what other economic indicators are saying. The target interest rate, or short-term interest rate is controlled by the Federal Reserve. Long-term interest rates are market driven. The global average interest rate for long-term debt is the result of global demand for credit compared to global supply of saving. It doesn’t seem clear if the country is still rising from itsShow MoreRelatedAggregate Demand And Aggregate Supply1732 Words   |  7 PagesAs the concept of supply and demand play a big role in microeconomics, aggregate demand and aggregate supply are of much relevance to economics on the larger scale. In order to truly understand aggregate demand and aggregate supply, we have to uncover what they mean and their effect on the economy. To begin with, the first part to aggregate demand and supply is aggregate demand. Aggregate demand is a curve that shows how much of the nation s output (or real GDP) in total that buyers want to purchaseRead MoreAggregate Demand And Aggregate Supply1154 Words   |  5 Pageswork was in the domain of aggregate demand and aggregate supply: the long run and the short run, recessionary and inflationary gaps and long-run economic equilibrium, determining the level of consumption and aggregate expenditures and aggregate demand. I have been able to retain that aggregate demand is the total quantity of goods and services that a household, foreign buyers, and governments will buy at a given price level. A shift to the left of the aggregate demand indicates a fall in price,Read MoreAggregate Demand and Aggregate Supply911 Words   |  4 PagesAssignment Aggregate Demand and Aggregate Supply 11. For each of following events, explain the short-run and the long-run effects on the output and the price level, assuming policymakers take no action. (a) The stock market declines sharply, reducing consumers’ wealth. AS1 AS2 AD1 AD2 Y2 Y1 P1 P2 P3 LRAS A B C P AD-AS diagram Output 0 Since the stock market declines sharply, the people’ wealth are being affected. In short run, it leads to a fall in aggregate demand whichRead MoreAggregate Demand And Aggregate Supply Model806 Words   |  4 PagesAggregate demand and aggregate supply model is considering about the economy as a whole and used to explain how national income is determined. (economicsonline, 2016) Aggregate demand is the total demand for the economy scarce resources at a given price level and in a given period of time. It includes export(I), government spending(G), investment(X), some of consumer spending and less imports from aboard(M). The formula is AD= C+I+G+X-M. (economicsonline, 2016) Apart from imports, AD is related withRead MoreSupply and Demand and Stationary Aggregate Demand4063 Words   |  17 Pagesï » ¿Macroeconomics, (Hubbard/O’Brien) Chapter 24 Aggregate Demand and Aggregate Supply Analysis 1) The static aggregate demand and aggregate supply curve model helps explain A) short term fluctuations in real GDP and the price level. B) long term growth. C) price fluctuations in an individual market. D) output fluctuations in an individual market. 2) The aggregate demand curve shows the relationship between the ________ and ________. A) inflationRead MoreAggregate Demand and Supply Models1095 Words   |  5 Pagesï » ¿Aggregate Demand and Supply Models Aggregate Demand and Supply Models ECO/372 Aggregate Demand and Supply Models The following report will detail out the current state of the U.S. Economy. The report will discuss the following: * Current economic state in regards to unemployment, expectations, consumer income and interest rates * The existing effect of the economic factors on aggregate demand and supply * Fiscal policies that are currently being recommended by government leadershipRead MoreMacroeconomics Essay on Aggregate Demand and Aggregate Supply1054 Words   |  4 Pagesmargins. At higher aggregate supply, the price is likely to decrease, compensating the fact that the companies have reduced their costs and allowing them to produce at the same level for similar prices. Aggregate demand will also increase, mainly because the products and services that are associated with oil and natural gas will become more affordable. As aggregate demand increases, the price will also likely increase in the short-term, at least until aggregate supply and demand regulate themselvesRead MoreAggregate Demand and Supply Paper1955 Words   |  8 PagesAggregate Demand and Supply Models Economic Critique Ken Drake, ECO 372 Macroeconomics September 10, 2012 Jason Foster Aggregate Demand and Supply Models Economic Critique In the United States the economy is currently in a recession, although signs are indicating that the economy is slowly recovering. In an effort to analyze the Unites States economy the unemployment rate, expectations, consumer income, and interest rates have been evaluated. The results of these evaluations are includedRead MoreAnalysis Of The Aggregate Demand And The Aggregate Supply Model Essay946 Words   |  4 PagesThe aggregate demand and the aggregate supply model is a macroeconomics model that explains price level and real output through the relationship of aggregate demand and supply. The aggregate demand curve consist of consumption(C), investment (I), government spending (G), net export (NX). The question caused by monetary expansion. In this essay, it analysis monetary policy, Philips curve which relation between inflation and unemployment.it draws conclusion and apply the theory into two countries whichRead MoreSupply and Demand and Aggregate Supply Curve.1966 Word s   |  8 Pagesbusinesses expect future profits to fall. a. Explain for each event whether it changes short-run aggregate supply, long-run aggregate supply, aggregate demand, or some combination of them. A deep recession in the world economy decreases aggregate demand. A sharp rise in oil prices decreases short-run aggregate supply. The expectation of lower future profits decreases investment and decreases aggregate demand. b. Explain the separate effects of each event on U.S. real GDP and the price level, starting