Economic Adviser Paper
Economic Advisement Paper
Economic Advisement Paper
When approaching the President as advisors on the country’s economic status and to supply our recommendations for his actions, it is imperative to take many things into consideration. It is necessary to look over the economic factors so that we have a full understanding and to look at both the Classical and Keynesian Perspectives so that our recommendations will lead the President in the right direction.
Analyzing Economic Factors
Unemployment basically means that individuals have less money and that usually means that there is less demand in the economy. This results in a shift in the aggregate demand curve which is the total amount of goods and services demanded in the economy at an overall price level and time period. The aggregate demand curve represents the relationship between price levels and quantity of output that individuals are willing to provide. The reason unemployment remains high comes from a lack of demand. An aggregate demand downfall is the kind of problem monetary policy can address. We need powerful and continuing monetary stimulus to move toward maximum employment and price stability. This shifts the aggregate demand curve to the left.
There are two policies that unemployment may be reduced to a certain extent. The first one is Fiscal Policy, where the Government minimizes taxes and expenses and maximizes the aggregate demand. The disposable income increases when the taxes are lessened which creates increased consumption. The second policy is Monetary Policy where the interest rate is lowered relating to increases consumption. When the aggregate demand for consumption increases, the aggregate demand for workers will also increase and unemployment gets lowered.
Aggregate Supply is the total of supply of goods and services at a total price level in a given period within a nation 's economy. The increased supply of products requires more workers thus decreasing
Economic Advisement Paper
When approaching the President as advisors on the country’s economic status and to supply our recommendations for his actions, it is imperative to take many things into consideration. It is necessary to look over the economic factors so that we have a full understanding and to look at both the Classical and Keynesian Perspectives so that our recommendations will lead the President in the right direction.
Analyzing Economic Factors
Unemployment basically means that individuals have less money and that usually means that there is less demand in the economy. This results in a shift in the aggregate demand curve which is the total amount of goods and services demanded in the economy at an overall price level and time period. The aggregate demand curve represents the relationship between price levels and quantity of output that individuals are willing to provide. The reason unemployment remains high comes from a lack of demand. An aggregate demand downfall is the kind of problem monetary policy can address. We need powerful and continuing monetary stimulus to move toward maximum employment and price stability. This shifts the aggregate demand curve to the left.
There are two policies that unemployment may be reduced to a certain extent. The first one is Fiscal Policy, where the Government minimizes taxes and expenses and maximizes the aggregate demand. The disposable income increases when the taxes are lessened which creates increased consumption. The second policy is Monetary Policy where the interest rate is lowered relating to increases consumption. When the aggregate demand for consumption increases, the aggregate demand for workers will also increase and unemployment gets lowered.
Aggregate Supply is the total of supply of goods and services at a total price level in a given period within a nation 's economy. The increased supply of products requires more workers thus decreasing
References: Colander, D. C. (2010). Macroeconomics (8th ed.). Boston, MA: McGraw-Hill/Irwin. Gilbert, R. A., Meyer, A. P., & Fuchs, J. W. (2013, March/April). The Future of Community Banks: Lessons from banks that thrived during the recent financial crisis. Federal Reserve Bank of St. Louis Review. Retrieved from http://research.stlouisfed.org/publications/review/13/03/gilbert.pdf Stone, C. (n.d.). Conference Board: Consumer Confidence Index. Retrieved from http://www.investopedia.com/university/conferenceboard7.asp Tutors On Net. (2009-2011). Unemployment - Aggregate Demand and Supply Homework Help, Retrieved from http://www.tutorsonnet.com/homework_help/macro_economics/unemployment_aggregat e_demand_supply_tutoring.htm Wikipedia. (n.d.). Classical Economics. Retrieved from http://en.wikipedia.org/wiki/Classical_economics