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Macroeconomics - Demand and Supply - Coursework Example

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This work called "Macroeconomics - Demand, and Supply" describes Macroeconomics and its two major functional areas that are Aggregate Demand and Aggregate Supply. The author takes into account some important factors regarding macroeconomics including unemployment, inflation, factors of production, and income distribution…
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Macroeconomics - Demand and Supply
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Download file to see previous pages Aggregate demand curve and aggregate supply curve are two of the most important terms associated with the field of macroeconomics. This paper focuses on these two areas of macroeconomics- Aggregate demand and supply curves and the reasons for the shifting of aggregate demand and supply curves.
Macroeconomics is one of the two major branches of economics and it is related to the performance and structure of the economy of any country. Macroeconomics focuses on the behavior and activities of the whole economy and is primarily concerned with various large scale indicators of the economy which include inflation, production, and unemployment rates of any specific country (McEachern, P. 98). The study of these indicators is done by the macroeconomists in order to understand the functioning of the whole economy.
According to Hughes and Perlman, unemployment is a very important phenomenon that is associated with cyclical fluctuations. The unemployment rate is the ratio of the unemployed people to the size of the labor force size of a country (p. 1). The labor force of a country consists of those people who are either employed or looking for a job but not have yet been employed anywhere. Unemployment is never good for the economy of a country because unemployed workers are often associated with loss of output and decreased income of a country.
Another significant indicator of a country’s economy is inflation which is related to the rate of change in the level of prices. Barro states that “by inflation, we mean a continuing upward movement in the general price level” (p. 237). Inflation is measured on a monthly basis when the rate of inflation is very high. The inflation rate is considered to be one of the most important forces of the economy that is weighed consistently on the value of a country’s currency. Changes in the rate of inflation affect the economy of a country because when the rate of inflation will be high, consumer prices will also get high which will result in an increased cost of living in the country (Snowdon and Vane, p. 3). Inflation is caused when the government of a country prints more than the required money and experiences various financial crises. Inflation is considered to be one of the greatest threats not only to the purchasing power of the people but also to the economy of a country. ...Download file to see next pagesRead More
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