Topics: Supply and demand, Inflation, Aggregate demand Pages: 2 (434 words) Published: April 2, 2013
Aggregate Demand and Supply Models
Ashley Anguay, Carissima Naki, Gil Xavier Urbano, Irison Kaleikini, and Sili Rocky Pau’u ECO 372
April 2, 2012
Stephen Moody

Aggregate Demand and Supply Models
Economic Critique

* A plain and simple meaning of unemployment is having less money or no income in which creates less demand in the economy. Unemployment causes discouragement and fear amongst people when it comes to looking and applying for jobs. Less or no jobs cause the supply of demand and labor in any economy to be at a low, shifting the aggregate demand or supply curve. When dealing with unemployment, businesses and organizations will cut jobs and wages that will eventually make people willing to accept any jobs offered including lower pay due to desperation. Unemployment is less money which leads to less demand that eventually causes business to close which in the end will affect the economy heavily. Expectations

Consumer Income
* Critiquing the current state of the United States Consumer Income economically can fluctuate and affect the aggregate supply and demand greatly. Consumer Income, also known as expendable income is what individuals in a particular country make working, after taxes and expenses are deducted. These wages could affect the curve of supply and demand because of six major factors. These factors are real interest rates, changes in expectations, wealth effect, changes in income of foreigners, changes in currency exchange rates, and inflation expectation changes. Real interest rates affect consumer income because if interest rates are lowered, the cost of major products will be lowered as well. Consumers will invest and have a higher demand for long term products that will help households such as appliances and vehicles. Changes in expectations are when purchasers feel the need to buy right away because the uncertainty of how the future prices or demands may be. Wealth effect is when a household wages...
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