Week 3, Learning Team - Aggregate Demand and Supply Models...

An Economic Critique of Aggregate Demand and Supply Models An Economic Critique of Aggregate Demand and Supply Models The recent fall of the United States economy has created a society of fear, insecurity, and doubtful investors, retirees, and consumers world-wide. Economists from around the world have come together to solve world-wide economic issues and bring stability back to businesses, households, and the government. Economics teaches you how to approach problems; it does not provide what is right or what is wrong, nor does it provide you with a definitive answer. Consistent evaluation of economic factors like unemployment, economic expectations, consumer income, and interest rates, can prove to be highly effective.†¦show more content†¦The effects of inflation, government regulation and taxes can all play an important part in developing classical economic theories. Classical economists also take into account the effects of other current policies and how new economic theory will improve or distort the free market environment (D ifferences Between Classical amp; Keynesian Economics, 2013). Consumer Income As of June 2013, median household incomes were up $598 month-over-month and $960 year-over-year. According to U.S. Department of Commerce (2013), â€Å"wages and salaries, the largest component of personal income, increased 0.5 percent in June after increasing 0.3 percent in May.† Personal expenditure is the vast element to aggregate demand. It is set on a household’s disposable income. There will be a shift to the left on aggregate demand if consumers buy more output at the price level. The current fiscal policy in place as it relates to consumer income states that the government can increase or decrease taxes on household income. An increase in taxes means a decrease in disposable income, because it will take money out of households. The opposite holds true if there is a decrease in taxes, because it will leave households with more money. Disposable income accounts for two-thirds of total demand. Economist had forecast a 0.1% rise, but reports show tha t spending fell 0.2% in May 2013 when adjusted for inflation. It is suggested that consumers pulled back from spending due toShow MoreRelatedeco3721430 Words   |  6 PagesWorkshop 3 = February 13, 2014 Workshop 4 = February 20, 2014 Workshop 5 = February 27, 2014 Instructor contact information: Jack Abbott Cell phone, 714-337-6092 Email, jbabbott@cox.net Course Description This course provides students with the basic theories, concepts, terminology, and uses of macroeconomics. Students learn practical applications for macroeconomics in their personal and professional lives through assimilation of fundamental concepts and analysis of actual economic eventsRead MoreBus515 Week 3 Assignment 1 Bus 515 Week 3 Assignment 14970 Words   |  20 PagesBUS 515 BUS515 Complete Course Click below link for Answer Visit www.workbank247.com http://workbank247.com/q/bus-515-complete-course/2105 http://workbank247.com/q/bus-515-complete-course/2105 BUS515 week 1 Discussion 1 Understanding OM Please respond to the following: Compare and contrast an existing organization’s three major functions (i.e., finance, marketing, and operations), and then justify the interdependence that operations have to finance and marketing. Provide examples to supportRead MoreMarketing Literature Review11908 Words   |  48 Pagesdatabase or about obtaining photocopies of the articles abstracted here, please call (800) 626-2823 or write to UMI, 300 N. Zeeb Rd., Ann Arbor, MI 48106. SUBJECT HEADINGS 1. 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