Aggregate Demand and Supply Paper

Words: 1974
Pages: 8

Aggregate Demand and Supply Models Economic Critique Ken Drake,
ECO 372 Macroeconomics
September 10, 2012
Jason Foster

Aggregate Demand and Supply Models Economic Critique In the United States the economy is currently in a recession, although signs are indicating that the economy is slowly recovering. In an effort to analyze the Unites States economy the unemployment rate, expectations, consumer income, and interest rates have been evaluated. The results of these evaluations are included in this report. Unemployment in the United States fell to 8.1% from 8.3% in July. U.S. employers are said to have added 96,000 jobs in July (KSL News, Sept) . According to reports from the department of workforce services the
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While this sounds like an ideal way to help people, the problem develops when the interest rates increase, or when the individual's income did not increase ore in some cases decreased. Several foreclosures were caused by these sub prime loan scenarios. which left many banks holding too many defaulted loans. The aggregate supply curve is the total supply of goods and services produced by that nation's suppliers and shows the relationship between a nation's overall price level at a given time period. The aggregate demand shows the amounts of real output at each different price level, the quantity of goods and services produced domestically that businesses, governments, consumers, and foreigners are willing to purchase during a specific period (Investopedia, 2012). Economic growth is an increase in Real Gross Domestic Product (GDP). It means an increase in value of goods and services produced in an economy (Investopedia, 2012). The rate of economic growth measures the annual percentage increases in real GDP. There are several factors affecting growth, but it is helpful to split them up into supply and demand factors. Economic events such as changes in interest rates and economic growth in the spending and interest-sensitive consumption spending. consumers may decide not to purchase a new house or automobile when interest rates are high. so by increasing the demand