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Macro Economics Assignment (Solved)

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Added on  2020-05-16

Macro Economics Assignment (Solved)

   Added on 2020-05-16

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Macro Economics Assignment (Solved)_1
Contents1.The Aggregate Supply and Aggregate Demand Curve............................................................2Aggregate Supply curve...............................................................................................................2Aggregate Demand Curve............................................................................................................32.Business Cycles....................................................................................................................5Contractionary Phase...................................................................................................................5Expansionary phase......................................................................................................................63.Stable Equilibrium and Phillips Curve.................................................................................8Stable Equilibrium: Examples From USA, Australia and China..................................................12United States of America...........................................................................................................12Australia.....................................................................................................................................13China..........................................................................................................................................14
Macro Economics Assignment (Solved)_2
1.The Aggregate Supply and Aggregate Demand CurveAggregate Supply curveThe ‘Aggregate Supply Curve’ or the AS Curve is the curve that depicts the total national output and helps understand the behavior of the production side factors of the economy. The maximum ‘sustainable output’ that can be produced without triggering upward inflationary pressures in the economy is known as the potential output.[ CITATION Sam04 \l 1033 ]The AS curve is determined by the quality and quantity of labour available, quantity and quality of capital (machinery and production equipment) and the natural resources available in the country.[ CITATION Sam04 \l 1033 ]In the Short Run the AS Curve slopes upwards because many production costs are inflexible in the short run but in the long run the curve is vertical i.e perfectly elastic.
Macro Economics Assignment (Solved)_3
Diagram 1 Short Run and Long Run (Potential Output) Aggregate Supply Curves Source: Prepared by Author. Adapted From [ CITATION Sam04 \l 1033 ]Aggregate Demand CurveThe Aggregate Demand Curve depicts the “total quantity of output that is willingly bought at a general price level”Aggregate demand is the total demand from the four broad components viz: Consumption Demand from consumers (C); Private Demand for Investment (I); Government Spending (G); Net Exports or the total residual of Exports and Imports of the country (x)[ CITATION Sam04 \l 1033 ] In the short run, the increase or decrease in Aggregate Demand leads to the increase of decrease in the price level.
Macro Economics Assignment (Solved)_4

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