country
$20 Bonus + 25% OFF
Securing Higher Grades Costing Your Pocket? Book Your Assignment at The Lowest Price Now!

Question:

Discuss about the Learning Basic Macroeconomics.
 
 

Answer:

Introduction:

The clamorous objective of the government of any economy is to ensure the existence of stability within the nation. The necessary and sufficient condition for stability within an economy is to attain equilibrium (Hubbard & O'Brien, 2015). The term equilibrium has been adopted from physics and is largely used in economics literature. It is a Latin word, which means the condition where the two main opposing forces interact to achieve a state where none of the power of these forces gets nullified and none can influence the situation (Mankiw, 2014). It economic, equilibrium is the state where the nation gets its optimal quantity of goods produced at the price where the supply of goods gets balanced with the demand for the same.

Through this write-up the ways in which any government can intervene and bring the market restore equilibrium within the society has been elucidated. While doing so a brief synopsis of the theories like short run, long run, aggregate demand and aggregate supply has been incorporated. The different types of equilibrium has also been highlighted to understand the way in which it can attain or regain stability if its lost. The role of government in such a situation has also been focused.  

Economic Theories and its Analysis:

Equilibrium in economics is attainable through the process of competition either in free market or in market regulated by the government. The equilibrium can be categorized into several types depending on the nature of occurrence. They can be static or dynamic in nature. Also they are categorized as partial and general equilibrium (Smith, 2015). Along with these four types there is existence of unstable and stable equilibrium.  This answer tries to find out the conditions necessary for obtaining static equilibrium. It is a situation where the economy does not deviate from its optimal position and even if it deviate the forces enacts amongst them-selves to restore the level of equilibrium. There are three categorization of market within the economy namely, financial market, product market and labor market. The global stability is ensured when there is smooth functioning and equilibrium in all these three markets. The AD curve has been derived from the famous CKM theory of IS-LM model. The AD-AS curve theory has been punned to explain the long term stability of the market (Rao, 2016). 

Notion of Aggregate Demand:

The demand generated by the consumers within an economy is known as aggregate demand. The AD curve shows the willingness of the entire nation to pay a price for some particular goods and services at varied price level. This downward sloping curve passes through the points where the actual and planned expenditure coincides (Mankiw, 2014).

Notion of Aggregate Supply:

The economy’s total production of goods supplied at a particular time is known as the aggregate supply of the economy. The supply curve can be divided into three parts namely the horizontal flat line (Keynesian), the upwards rising part and the vertical part (Classical theory). In the long run it is assumed to be vertical in nature (Rao, 2016).

 

Short-Run Equilibrium:

In economics, the term short-run has been interpreted as the phenomenon where at-least one of the components involved in production is fixed. In general, capital has always been assumed to be the fixed factor (Gillespie, 2014). Interaction of the economic components in the short run is as follows:

The figure above shows that the short-run equilibrium is attained at the point where the AD and AS curve meets. The market generated price and quantity is at P and Y respectively. Due to some event it may so happen that the aggregate demand increase. It leads to an outward shift of the demand curve, as shown by shift from AD to AD1 here. Since, it is the short-run and capital is the fixed factor of input thereby there’s no change in the net supply and the AS curve. Therefore, the economy gets a new equilibrium at the intersection of AS and AD1 where the price level is P1 and output produced is Y1. The shift in AD resulted in increased level of output as well as increase in the price level. Under this circumstance, the government may face a dilemma of choosing a proper policy as increased output level is always desirable but increase in the price level is not. As inflation is a plague for the economy, hence the government has to intervene and reduce the pressure on price level thereby balancing the economy (Ireland, 2014).

Long-Run Equilibrium:

The long run is that period of time where all the factors of production are variable and production takes place at optimum level by ensuring the economy is at its natural level of employment (Hubbard & O'Brien, 2015). The figure below can help in elucidating the ways in which equilibrium is achieved.

According to this figure it can be seen that initially equilibrium was at the intersecting point of the three curves namely, AD, LRAS and SRAS. It has been seen in the short run that if the AD curve shifts outward a new equilibrium is formed. Here even if the demand curve shifts outward there is going to be an increase in the price level. On other hand, the quantity of goods available is not going to increase since the equilibrium is already using its resources optimally in the long run (Snarr, 2014). Hence, with these restricted supply and high price the AD curve has to shift backward from AD1 to AD, to the level where it can intersect the SRAS and LRAS at a single point.

In case of any problem the government takes up measures with the direct and indirect tool namely, the fiscal policy and the monetary policy respectively. Since, the equilibrium gets re-stored in the long-run hence it is termed as stable equilibrium of the economy (Del Negro, Giannoni, & Schorfheide, 2015).

Conclusion:

The above description can be wrapped up by stating that equilibrium is attained whenever the three different types of markets are individually in equilibrium. There is a possibility of distortion in the market under short run. A new equilibrium may be attainable under that scenario. But in long run the equilibrium is fixed at a particular point and digression from the same may initially dampen the economy but it gradually gets restored or forced to get re-stored with the government intervention. Hence, the government has a major role in maintaining the economic balance by ensuring natural rate of employment and low inflation rate within the economy in long-run.

 

Bibliography

Del Negro, M., Giannoni, M. P., & Schorfheide, F. (2015). Inflation in the Great Recession and New Keynesian Models. American Economic Journal: Macroeconomics , 168-196.

Gillespie, A. (2014). Foundations of economics. Oxford University Press, USA.

Hubbard, R. G., & O'Brien, A. P. (2015). Macroeconomics. Pearson.

Ireland, P. (2014). The Classical Theory of Inflation and Its Uses Today.

Mankiw, N. G. (2014). Principles of macroeconomics. Cengage Learning.

Rao, B. (2016). Aggregate demand and supply: a critique of orthodox macroeconomic modelling. Springer.

Smith, J. (2015). Information equilibrium as an economic principle.

Snarr, H. W. (2014). Learning Basic Macroeconomics: A Policy Perspective from Different Schools of Thought. Business Expert Press.

OR

Cite This Work

To export a reference to this article please select a referencing stye below:

My Assignment Help. (2018). Learning Basic Macroeconomics. Retrieved from https://myassignmenthelp.com/free-samples/learning-basic-macroeconomics.

"Learning Basic Macroeconomics." My Assignment Help, 2018, https://myassignmenthelp.com/free-samples/learning-basic-macroeconomics.

My Assignment Help (2018) Learning Basic Macroeconomics [Online]. Available from: https://myassignmenthelp.com/free-samples/learning-basic-macroeconomics
[Accessed 25 May 2020].

My Assignment Help. 'Learning Basic Macroeconomics' (My Assignment Help, 2018) <https://myassignmenthelp.com/free-samples/learning-basic-macroeconomics> accessed 25 May 2020.

My Assignment Help. Learning Basic Macroeconomics [Internet]. My Assignment Help. 2018 [cited 25 May 2020]. Available from: https://myassignmenthelp.com/free-samples/learning-basic-macroeconomics.


MyAssignmenthelp.com provides guaranteed satisfaction with a commitment to complete the work within time. Combined with our meticulous work ethics and extensive domain experience, MyAssignmenthelp.com is the ideal partner for all your homework/assignment needs. We pledge to provide 24*7 support to dissolve all your academic doubts. We are composed of 3000+ esteemed experts who have been empanelled after extensive research and quality check. MyAssignmenthelp.com provides undivided attention to each assignment order with a methodical approach to solution. Our network span is not restricted to US, UK and Australia rather extends to countries like Singapore, Canada and UAE. Our assignment help services include thesis help, case study help, homework help, coursework help, MBA help and Programming help. Get your work done at the best price in industry.

Latest Samples

NUTR11101-Food Nutrition And Health

Download : 0 | Pages : 10
  • Course Code: NUTR11101
  • University: Bond University
  • Country: Australia

Answers: 1.Betty is 48 years old and her height is 167 cm, weight is 71 kg, waist circumference is 87 cm and hip circumference is 88 cm. The Basal Metabolic Rate is defined as “the energy required for performing vital body functions at rest and is the largest contributor of energy expenditure” (Sabounchi, Rahmandad & Ammerman, 2013, pp. 1364). Betty’s basal metabolic rate is 34 x 71 + 3538 = 5952kJ/day. Determination of phy...

Read More arrow

IST8101-Process Of Finding A Good Research Topic

Download : 0 | Pages : 5
  • Course Code: IST8101
  • University: Wilmington University
  • Country: United States

Answer: The research paper is an academic writing that is based on the original research of a specific topic by the author. The author analyses the topic under research and interprets the finding of the research in order to come up with a conclusion or a recommendation. This paper gives a detailed information on the process of finding a good research topic. For this to be achieved one requires more than just knowledge or excellence. It is esse...

Read More arrow Tags: Australia Rockville Management University of New South Wales 

PROJ587-Project Portfolio Management Process 

Download : 0 | Pages : 13

Answer: Introduction Portfolio management process is an important requirement for creating a list of the projects that should be undertaken to benefit the requirements of an organization. The portfolio management process has a number of components that must be defined and a number of selection criteria must be used before one or more projects are officially selected for execution. Again, there are many portfolio processes and one of the types...

Read More arrow Tags: Australia Arlington Management University of New South Wales 

SIT772-Database And Information Retrieval Skills

Download : 0 | Pages : 4

Answers: 1 creating inverted index The three documents are; Computer vision Computer vision is concerned with the automatic extraction, analysis and understanding of useful information from a single image or a sequence of images Security and privacy Security and Privacy has been the premier forum for presenting developments in computer security and electronic privacy, and for bringing together researchers and practitioners in the field. ...

Read More arrow

NSG426 Integrity In Practice: Ethic And Legal Considerations

Download : 0 | Pages : 2
  • Course Code: NSG426
  • University: University Of Phoenix
  • Country: United States

Answer: Nursing E-portfolio Legal issues and frameworks in competent nursing In my academic course of nursing I have faced with many ethical dilemmas and am looking forward to many such ethical dilemmas. I believe that as a nurse I should be aware of my legal and the ethical duties as a nurse. One of the legal aspects is the responsibility and the accountability of the registered nurses. A nurse is committed to provide a safe care to t...

Read More arrow
Next
watch

Save Time & improve Grade

Just share Requriment and get customize Solution.

question
We will use e-mail only for:

arrow Communication regarding your orders

arrow To send you invoices, and other billing info

arrow To provide you with information of offers and other benefits

1,317,480

Orders

4.9/5

Overall Rating

5,074

Experts

Our Amazing Features

delivery

On Time Delivery

Our writers make sure that all orders are submitted, prior to the deadline.

work

Plagiarism Free Work

Using reliable plagiarism detection software, Turnitin.com.We only provide customized 100 percent original papers.

time

24 X 7 Live Help

Feel free to contact our assignment writing services any time via phone, email or live chat.

subject

Services For All Subjects

Our writers can provide you professional writing assistance on any subject at any level.

price

Best Price Guarantee

Our best price guarantee ensures that the features we offer cannot be matched by any of the competitors.

Our Experts

Assignment writing guide
student rating student rating student rating student rating student rating 5/5

2279 Order Completed

97% Response Time

Zachary Perez

PhD in Computer Science and Information System

Washington, United States

Hire Me
Assignment writing guide
student rating student rating student rating student rating student rating 5/5

2115 Order Completed

97% Response Time

Kimberley Chen

MPA in Accounting

Singapore, Singapore

Hire Me
Assignment writing guide
student rating student rating student rating student rating student rating 5/5

234 Order Completed

100% Response Time

Samantha Ji

PhD in Chemistry with Specialization in Organic

Singapore, Singapore

Hire Me
Assignment writing guide
student rating student rating student rating student rating student rating 5/5

755 Order Completed

95% Response Time

Douglas Cowley

Masters in Finance with Specialization in Audit

Wellington, New Zealand

Hire Me

FREE Tools

plagiarism

Plagiarism Checker

Get all your documents checked for plagiarism or duplicacy with us.

essay

Essay Typer

Get different kinds of essays typed in minutes with clicks.

edit

GPA Calculator

Calculate your semester grades and cumulative GPa with our GPA Calculator.

referencing

Chemical Equation Balancer

Balance any chemical equation in minutes just by entering the formula.

calculator

Word Counter & Page Calculator

Calculate the number of words and number of pages of all your academic documents.

Refer Just 5 Friends to Earn More than $2000

Check your estimated earning as per your ability

1

1

1

Your Approx Earning

Live Review

Our Mission Client Satisfaction

The work was great I loves how fast the work was done. The prices was great it was not expensive

flag

User Id: 433071 - 24 May 2020

Australia

student rating student rating student rating student rating student rating

The expert didn't address all aspects of the assignment also didn't get my solution on time

flag

User Id: 430334 - 24 May 2020

Australia

student rating student rating student rating student rating student rating

Assignment looks amazing. I hope to score well. Will soon share my grades. I would recommend people like me who are working for livelihood and have studies to complete to take up this site as your best buddy.

flag

User Id: 432467 - 24 May 2020

Australia

student rating student rating student rating student rating student rating

Team My Assignment, you are the best. Assignment was done and submitted and as a result, grade marking was 80. Once again thanks so much

flag

User Id: 392423 - 24 May 2020

Australia

student rating student rating student rating student rating student rating
callback request mobile
Have any Query?