Aggregate supply

of labour supply, in future generations, caused by the low fertility rate. Before making the OCP an actual policy, the fertility rate in China was about five children per female; today, the rate is below the national average of 1.7 children per female (Eberstadt, 2007). The low fertility rate poses a concern for the supply of labour in the market. Graph 1 shows that a decrease in labour supply leads to rapid unemployment, price increases and a decrease in GDP. The long-run aggregate supply curve…

a shift from 2 to 3 (Figure 1). A decrease in government spending occurs, shifting from SPRC1 to SPRC2 where inflation expectations are based upon previous, leading to a withdrawal of confidence in the market. When government spending drops, aggregate supply contracts (AS to AS’) leading to output returning to a lower level, meaning firms then stop investing in production make cuts, meaning that unemployment rises again, and this continues until the economy ends up at point 4- where inflation is…

Introduction In this essay, I am going to compare exchange rate targeting, monetary targeting and inflation targeting. I am going to explain when we should use the different types of policies. I will also explain the different advantages and disadvantages of each of them in order to compare them. During the past several years, we have asked ourselves the question: "How should we conduct the monetary policy to find price stability?" The government and the economic authorities goal is to find…

economic growth and price are not synchronized. The prosperity of virtual economy weakens the interactive relationship between money supply and inflation. Friedman argues that "inflation in any conditions of time and space is a monetary phenomenon". He is convinced that all the inflation is derived from the high growth rate of money supply. But the changing in the money supply and price fluctuation, between consumption…

between inflation and unemployment. In addition Pettinger (2011) says “If an economy experienced inflation, then the Central Bank raises interest rates. Higher interest rates will reduce consumer spending and investment leading to lower aggregate demand. This fall in aggregate demand will lead to lower inflation. However, if there is a decline in Real GDP, firms will employ fewer workers leading to a rise in unemployment.” Furthermore Hoover (2008) brought forward that “when unemployment was…

wage increase and leading to another wage increase, meant to accommodate the changing price of goods. • Monetary inflation Of the type of inflation, this is one of the most globally visible. It occurs when there is a sustained increase in the money supply of a country. The result of monetary inflation is often price or commodity inflation. The exact relationship between monetary and price inflation is complex. As a result there are many theories as to how it works, but no current…

The Melting Pot “The Melting Pot” – the United States nickname, yet we are constantly shunning and shaming those that enter the country as immigrants. Native-born individuals scrutinize the immigrants for stealing the jobs, lowering the wages, and every other negative outcome of the economy. Americans generalize the face of immigrants as either Mexican or Asian; however, the United States receives immigrants from several other places as well. As a matter of fact, immigrants account for a…

Inflation is the “increase in the general price level of goods and services in an economy” (Heakak, 2017). Inflation can be broken down into different types, resulting from different situation in the economy. When there is a change in the supply side of the economy, cost-push inflation occurs. On the other hand, when there is a change in the demand side of the economy, demand-pull inflation occurs (Surbhi, 2017). Deflation and disinflation help to describe the level of inflation is in an economy…

not accurately measured, due to lack of documentation, is that of illegal immigrants. Much of these immigrants are employed within the low education level to medium education level required jobs. Unfortunately, wages are dependent on the aggregate demand and supply dispensability. The Bureau of Labor Statistics (BLS) considers a person to be employed…

government intervention, or a combination of both? Identify the causes of the crisis, the steps the private and public sector took to resolve it, and what leaders should do to keep it from happening again. Remember, banks are profit making firms who supply capital to suppliers of goods and…