Macroeconomic policy has the following objectives: economic growth, optimal balance of foreign trade, increased employment, reduction of inflation and the desire to ensure that the balance has been established supply and demand.
situation on the market is fickle and financial experts are constantly alert to the company was able to react in time to changes.Be sure to study the aggregate demand and aggregate supply.The first indicator is the volume of production of domestic producers, which the government, businesses and consumers will be able to buy at different level of prices.
important factor influencing aggregate demand and aggregate supply, is the cost of production.If the level of prices for domestic products is increased, the cost of customers sharply reduced.By reducing the cost of goods and more people begin to purchase them.Thus, between the value of the level of demand and there is a relationship, which is negative or reverse.This relationship can be displayed on the graph.The demand curve shows the changing consumer income.When the price level rises, then we move up the curve.But do not think in this case that the total nominal income of the country is reduced, because the funds are turning around.They will return again to customers, the state in the form of wages, taxes, rent, and so forth.
aggregate demand and aggregate supply also depends on the non-price factors.Consider that affects the purchasing power:
1) wealth effect.Many people keep their savings in assets (term deposits, stocks, bonds, etc.), They have a certain nominal value.If there is an increase in prices, the assets start to depreciate.As a result, the population is getting poorer.
2) Changes in consumer spending for products associated with the growth of the debt, the expectations of the market, taxes and wealth.
3) The cost of the investment.These include components such as interest rates, taxes on companies, excess capacity, technology, expected profit.
4) Public expenditure.This market is the subject of one of the largest buyers.If the state allocates funds for certain purchases, the aggregate demand grows.
5) The cost of net exports.This takes into account: the exchange rates of national income in foreign countries.
Line aggregate demand moves to the right when the costs of the population for the purchase of goods are rising.This happens when you change the quality of life: the growth of wage deflation, the increase of money in circulation and so on. The opposite effect of the following factors: tax increases, a rise in prices, the propensity to save, etc.
Aggregate supply - output at each price level.At the higher cost of production organizations increasingly trying to increase the production of goods than low.The relationship between aggregate supply and the price level is positive or forward.The curve is presented in three sections:
1) horizontal;
2) trending up;
3) vertical.
price factors indicate movement along the aggregate supply.
non-price factors are numerous:
1) The cost of resources.
2) Legal provisions.
3) The level of productivity.
Increase in aggregate supply caused by the following factors: the rise in prices, reducing production costs, improving technology.Aggregate supply curve will move to the right, when labor productivity is growing.When demand begins to increase more rapidly than the volume of production, there is depreciation of money.Aggregate demand and aggregate supply are constantly intertwined.
