Economic Critique

Economic Critique

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Economic Critique

Aggregate demand is the demand sum derived from the finished products and services. It involves the quantity of goods that are willing to be bought at various cost levels by consumers. The aggregate demand is considered effective after the desire for purchasing has been integrated with the capacity of buying (Daly & Farley, 2004). However, aggregate supply is the supply sum of goods in which a business is willing to sell to consumers. Sellers are usually willing to sell the goods and services at different set price levels to customers.

One of the main factors that affect the aggregate demand and supply is unemployment, which defines the population that is not employed or working. When a person is not employed, he is unable to earn any income and hence have the ability to purchase goods and services. Therefore, as the rate of unemployment increases, the level of aggregate demand decreases. In the case of supply, when demand is decreasing due to the increased level of unemployment, the business lacks enough profit for producing enough goods and services. As a result, the supply of goods decreases with increased unemployment (Daly & Farley, 2004).

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