The aggregate supply curve shows the total supply in an economy at different price levels. Generally, the aggregate supply curve slopes upwards – a higher price level encourages firms to supply more. However, there are different possible slopes for the aggregate supply curve. It could be highly inelastic (vertical) to very elastic. It is important …
A look at factors that determine an individuals supply of labour and the market supply of labour. Higher wages usually will encourage a worker to supply more labour because work is more attractive compared to leisure. Therefore the supply curve for labour tends to be upwardly sloping. However, a worker isn’t just interested in earning …
The demand curve shows the amount of goods consumers are willing to buy at each market price. An individual demand curve shows the quantity of the good, a consumer would buy at different prices. Plotting price and quantity supply Market equilibrium More demand curves Related Factors affecting demand Demand …
Joint supply occurs when two goods are produced together from the same origin / raw material. Examples of joint supply If you grow wheat, you get both wheat and straw. Producing refined flour creates bran as a byproduct. Bran can be used as fibre ingredient or using in compost If you increase the supply of …
An adverse supply-side shock is an event that causes an unexpected increase in costs or disruption to production. This will cause the short-run aggregate supply curve to shift to the left, leading to higher inflation and lower output. Diagram showing supply-side shock SRAS shifting to the left causes a higher price level and lower real …
Definition: The money supply measures the total amount of money in the economy at a particular time. It includes actual notes and coins and also any deposits which can be quickly converted into cash. There are different measures of the money supply. Narrow Money e.g. M0 = This is the level of notes and coins …
Supply side policies are government policies which seek to increase the productivity and efficiency of the economy. They can involve interventionist supply side policies (e.g. government spending on education) or free market supply-side policies (e.g. reduce government legislation) The main macroeconomic objectives of the government include: Higher economic growth Low inflation Low unemployment Equilibrium on …
Readers Question: Does expansionary monetary policy, where money supply is increased, also cause a depreciation in the currency? – Since there is a surplus of the currency in the foreign exchange market. Expansionary monetary policy means policies to increase demand in the economy. Expansionary monetary policy typically will involve: Lower interest rates – to make …