Essay The theme: Aggregate demand and aggregate supply

Essay

The theme:Aggregate demand and aggregate supply

Of course,the main issue of market economy is to achieve standart living.So, first of all,we must learn its construction.The important thing in any field it is to achieve equilibrium. Ok,Why? In any field,if we really wish to achieve something, we must find our way and try in order to have constant level.So, in economy, basically,in market equilibrium is main factor. Thus,when will it be market equilibrium and how?

It is just connected with aggregate demand and supply.Briefly,aggregate demand is total amount of money exchanged for all goods and services produced in specific price in a particular period.It consists of consumer spending,private investment, export and import goods also,government spending.That’s why to calculate AD we add all spending fields. Moreover,goods and services are related to closely their own prices.And they together appear AD curve.Typically sloping downward,curve may change money supply,increases and decreases in tax rates.

Aggregate supply is the capacity of the economy,the amount it will produce or can produce at a given price.Saying aggregate supply wu must not understand only about goods,because it can be a function of the costs of production,level of technology,labour skills,incentives to production,taxation,capital,productivity and the labour market.If supply output decreases,it is a main indicator to businesses in order to expand production.In my opinion,if it appears shortness of goods ,we must think about increasing manufactures to supply needs,not increasing their prices.

In shortly saying,aggregate demand and supply main keys to catch market equilibrium and they supply all processes go correctly.Just,if the supply in the market is equal to the demand in the market,there is nothing to worry.