logo

Assignment on Equilibrium State of the US, Australia, and China's Economy

11 Pages1624 Words70 Views
   

Added on  2020-05-16

Assignment on Equilibrium State of the US, Australia, and China's Economy

   Added on 2020-05-16

ShareRelated Documents
Running Head: BUSINESS ECONOMICS1Business EconomicsName:Institution
Assignment on Equilibrium State of the US, Australia, and China's Economy_1
BUSINESS ECONOMICS2Phase OneIntroductionA stable equilibrium exists when a system returns to equilibrium once the stability is interrupted. A change in demand or supply’s determinant shifts the corresponding demand or supply curve. The change disrupts the balance resulting in a shortage or surplus. Due to market imbalance, prices change. This results in changes in quantity demanded, and the amount supplied. Change in the amount eliminates shortages or surplus restoring market equilibrium. The assignment addresses equilibrium state of the US, Australia, and China’s economy.Step OneAggregate demand refers to the measurement of final goods and services produced in a country. Aggregate demand is expressed as the total money exchanged for these commodities. It is measured using market value, thus representing total output at a given price.The nature of aggregate demand curve slopes from left to right (Galí, 2013). There is a decrease or increase in demand along the curve due to changes in goods’ and services’ prices.
Assignment on Equilibrium State of the US, Australia, and China's Economy_2
BUSINESS ECONOMICS3Also, the curve shifts when money supply and tax rates change. The curve slopes downwards due to the following reasons; first, at a reduced price level, consumers tend to have higher disposable income. Thus they spend more. Second, there is increased demand for exports resulting from lower price levels. Lastly, at lower price levels, there is a fall in interest rates causing a higher aggregate demand. Step TwoShort-run ASShort-run aggregate supply is the sum of goods and services generated in an economy at specific. The shifting factors include; first, government policies such as taxes temporary affect aggregate price levels. Some resources necessary for production are fixed (Reifschneider, Wascher & Wilcox, 2015) output supplied. This affects the short run supply curve. Second, at the same price level, a rise in factor cost makes production less profitable. This causes the AS to shift leftwards.
Assignment on Equilibrium State of the US, Australia, and China's Economy_3
BUSINESS ECONOMICS4Long-run ASLong-run aggregate demand indicates a relationship between price level and output in thelong-run. However, input prices are not considered constant. The shifting factors include; first, increase in quantity factors results to rise in employment real national income (Angeli, Amrit & Rawlings, 2012). This is because more resources are available for production. Second, there is anincrease in full employment real national income due to improved factor quality. This leads to the same quantity of factors producing more output. Third, advanced technology, innovation, andglobalization result to increased production with the same amount of resources.
Assignment on Equilibrium State of the US, Australia, and China's Economy_4

End of preview

Want to access all the pages? Upload your documents or become a member.

Related Documents
Concept of Stable Economic Equilibrium
|10
|1423
|344

Economics for Business Assignment Equilibrium
|6
|1063
|148

Macro Economics Assignment (Solved)
|17
|1828
|104

Effect of Drought on Macroeconomic Equilibrium of Australia
|7
|1207
|63

Aggregate Models and Macroeconomic Policies
|8
|1343
|49

Economics for Business Environment Name of the Student Name of the University Author Note
|10
|1383
|296