\"Aggregate Demand and Supply\" Please respond to the following: You have been h
ID: 1092902 • Letter: #
Question
"Aggregate Demand and Supply" Please respond to the following: You have been hired as a consultant by your mayor to evaluate the increase in aggregate demand in the city where you live.
Describe to the mayor one (1) aggregate demand and supply factor that would have the greatest impact on the economy of your city. Explain how a decrease in aggregate demand affects each of the following variables: inflation, unemployment rate, production, employment rate, and consumer confidence. Provide concrete examples to support for your response.
Explanation / Answer
I would explain the following to the mayor:
In our city, the level of Income would have the greatest impact on the aggregate demand and productivity. Without adequate income, people in the city will not be able to purchase items and produce adequate demand.
A decrease in aggregate demand affects consumer confidence and unemployment in this way- A decrease in the supply of money will decrease aggregate demand and shift the aggregate demand curve to the left.
A decrease in aggregate demand will cause inflation to rise.
The unemployment rate will rise with less local demand as manufactures and retailers are forced to lay people off.
Production Rates will slow, since there is less demand, fewer products need to be produced.
The employment rate will decrease as more people are out of work.
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