Week 3, Learning Team - Aggregate Demand and Supply Models - Economic Critique

1632 Words Sep 27th, 2013 7 Pages
An Economic Critique of Aggregate Demand and Supply Models

An Economic Critique of Aggregate Demand and Supply Models The recent fall of the United States economy has created a society of fear, insecurity, and doubtful investors, retirees, and consumers world-wide. Economists from around the world have come together to solve world-wide economic issues and bring stability back to businesses, households, and the government. Economics teaches you how to approach problems; it does not provide what is right or what is wrong, nor does it provide you with a definitive answer. Consistent evaluation of economic factors like unemployment, economic expectations, consumer income, and interest rates, can prove to be highly effective.
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Through these methods of fiscal policy, the rise in aggregate demand stimulates businesses to increase production, employ more workers, and increase household incomes, enabling them to buy more. The classical theory concept known as “free market” requires little to no government intervention. This allows consumers to act in their own self-interest in regards to economic decisions. In the current issues regarding consumer income, Keynesian theory has been proven effective as shown in the increase of income and the shift in aggregate demand. If the current state of the U.S. consumer income remains on course, there should be a steady climb household disposable income.
Interest Rates
Based on my finding, as an international reporter, it was disclosed that interest rates have been the primary macroeconomic indictor of our economy today. It is an aggregate figure that represents how the present banks and financial sector operate on a national and regional economy level. So what is an interest rate, According to Colander (2010), Chapter 13, “Interest rates — the prices that are charged or paid for the use of a financial asset —are key variables in the financial sector.” It’s the rate of the cost of borrowing money, which reflects both the supply and demand of United States currency at a particular time. Therefore, after critiquing the current

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