Despite this, the Government has employed many discretionary changes in fiscal policy, to stimulate aggregate demand and supply in the economy, and thus, increase economic growth. ... Another method to stimulate economic growth is to increase aggregate demand, which is accomplished through a series of tax cuts highlighted in the Ten Year Tax Plan. ... These effects of NAIRU are demonstrated in the Phillips curve below. ... A decrease in NAIRU to B, also shifts the short-run Phillips curve. ... As well as social and political benefits, redistributing income can stimulate aggregate demand, as ...

• Word Count: 1386
• Approx Pages: 6
• Grade Level: Undergraduate

For example, the inflation rate averaged 15% between 1973 and 1981, and 6% between 1981 and 1990 (Begg, p.274). ... The demand-pull theory shows that inflation is caused by higher aggregate demand (AD shifts right). ... However, this rise in AD will only cause inflation if the aggregate supply (AS) curve isn't horizontal. ... With cost-push inflation, higher prices are caused by rising costs, so the AS curve shifts left. ... This cycle of cost-push inflation is unlikely to continue without increased aggregate demand, as firms would be unable to keep on increasing their prices without a...

• Word Count: 1523
• Approx Pages: 6
• Has Bibliography
• Grade Level: High School

Economic growth, in the short run, is the rise in real GDP due to the rise in aggregate demand, and in the long run, it's an increase in productive capacity-the maximum output that the economy can produce. ... For example, the invention of the computer has significantly increased worker productivity. ... Production possibilities Curves demonstrate how economic growth can reduce scarcity. ... Since this increase maximum output that we are able to produce it shifts the production possibilities curve outward. ... This causes the demand to increase on certain products, which leads to the...

• Word Count: 1462
• Approx Pages: 6
• Grade Level: Undergraduate

To explain the relationship, here is a small diagram which starts with a simple demand curve. ... The curve simply shows how the demand for a particular good or service can change really easily due to a change in price As you can see with the curve, one assumption would say that the demand is "Price-elastic" This shows that the consumer is in a position to change the demand in response to any changes within the price. ... A demand curve also shows and expresses the total relationship between price and demand in the economy for the good/service that is being considered. ... This is u...

• Word Count: 2078
• Approx Pages: 8
• Has Bibliography

4) What happens if aggregate demand is too low to aggregate supply? ... It is related with aggregate demand and aggregate supply. By aggregate demand it means the total amount of spending in the economy, whether by consumers, by customers outside the country for our export. ... Unemployment and recession may occur if aggregate demand is too low relative to aggregate supply. ... An example is the refining of crude oil to produce petrol. ...

• Word Count: 2042
• Approx Pages: 8
• Has Bibliography
• Grade Level: High School

Such factors have a negative impact on Starbucks, because when consumer spending decreases, the demand curve shifts to the left and hence revenue falls. The same result is observed when the economic growth of countries is slow or stagnant and aggregate demand is low. ... For example, when opening its first branch in India, which is not a developed country, Starbucks chose a relatively upper-class area of Mumbai to attract customers. ... In an area like Manhattan, where coffee is almost a necessity for the working class, Starbucks can open a large amount of stores, knowing that the demand in t...

• Word Count: 1562
• Approx Pages: 6
• Has Bibliography
• Grade Level: Undergraduate