Question

Why is there a need for an aggregate demand and aggregate supply model of the economy?...

Why is there a need for an aggregate demand and aggregate supply model of the economy? Why can’t the supply and demand model for a single product explain developments in the economy?

Homework Answers

Answer #1

Answer:-

There is a need for aggregate demand and aggregate supply in the economy because in an economy there are many different goods and services produced in the economy.

A demand and supply of a single good will take different factors into account while establishing an equilibrium like taste and preference, substitute and complements of the goods etc. all these are very small factors when the economy as a whole is concerned. They don't' cover the whole picture or the economy as a whole.

In an aggregate demand and supply curve the macro factors like income, government expenditure, and supply shocks etc are considered which affect the economy as a whole. This can't be explained by taking a single product or a demand and supply curve of a single product.  

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Why is there a need for an aggregate demand and aggregate supply model of the economy?...
Why is there a need for an aggregate demand and aggregate supply model of the economy? Why can’t the supply and demand model for a single product explain developments in the economy?
Based on the Aggregate Supply and Aggregate Demand model, and the IS-LM model, graphically illustrate and...
Based on the Aggregate Supply and Aggregate Demand model, and the IS-LM model, graphically illustrate and explain what effect an increase in the money supply will have on the economy. In your graphs, clearly illustrate the short-run and medium-run equilibria. Draw both the IS-LM and the AD-AS models.
1a. What does the model of aggregate demand and aggregate supply try to explain? 1b. What...
1a. What does the model of aggregate demand and aggregate supply try to explain? 1b. What does the model of aggregate demand and aggregate supply try to explain? 1c. What is aggregate supply? 1d. What is aggregate supply? 1e. What six factors shift the aggregate demand curve? 1f. What shape is the long run aggregate supply curve? 1g. Explain why LRAS is this shape. 1h. What is the natural rate of output?
Use the aggregate demand/aggregate supply model of the economy to predict what happens to GDP, price,...
Use the aggregate demand/aggregate supply model of the economy to predict what happens to GDP, price, and unemployment levels when households increase credit card debt or usage.
Draw and carefully describe a graph that utilizes the Aggregate Demand/Aggregate Supply model that would illustrate...
Draw and carefully describe a graph that utilizes the Aggregate Demand/Aggregate Supply model that would illustrate the current state of the aggregate economy in the United States as of July 2020. The Aggregate Demand/Aggregate Supply Model is first introduced in Chapter 112 of your text and is further explicated in Chapters 12 and 13. Make sure that you explain your graph in your own words.
The Aggregate Demand – Aggregate Supply model (AD/AS) is a guide for policymaking. Explain, using an...
The Aggregate Demand – Aggregate Supply model (AD/AS) is a guide for policymaking. Explain, using an AD/AS model, the effect on the aggregate demand (AD) of expansionary monetary and fiscal policy. First draw the diagram and then explain the impact on aggregate demand (AD).
Question 1: Draw and carefully describe a graph that utilizes the Aggregate Demand/Aggregate Supply model that...
Question 1: Draw and carefully describe a graph that utilizes the Aggregate Demand/Aggregate Supply model that would illustrate the current state of the aggregate economy in the United States as of October 2020. The Aggregate Demand/Aggregate Supply Model is first introduced in Chapter 11 (Links to an external site.) of your text and is further explicated in Chapters 12 and 13. Make sure that you explain your graph in your own words.  Describe the current state of the economy relative to...
Show on graph (using the aggregate demand and aggregate supply model) the effects of: An expansionary...
Show on graph (using the aggregate demand and aggregate supply model) the effects of: An expansionary fiscal policy (reduction in taxes or increase in government spending) trying to stimulate the economy to get it out of the recession.
Draw and carefully describe a graph that utilizes the Aggregate Demand/Aggregate Supply model that would illustrate...
Draw and carefully describe a graph that utilizes the Aggregate Demand/Aggregate Supply model that would illustrate the current state of the aggregate economy in the United States. The graph needs to be clearly labeled and explained carefully. Make sure that the graph includes an aggregate demand (AD) curve, a short run aggregate supply (SRAS) curve, and a long run aggregate supply curve (LRAS, Potential GDP) curve.
Using an aggregate supply and aggregate demand model illustrate and explain the effect of a significant...
Using an aggregate supply and aggregate demand model illustrate and explain the effect of a significant increase in technological innovation.
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT