Scarcity and Society 3 Flashcards
If aggregate demand increase, what will people most likely do?
Hint; They need their wants satisfied and their economy can’t keep up with its aggregate supply therefore ……….. products take over.
People will buy foreign products, therefore exports increase.
If the rate of inflation is high what will occur to homemade products compared to foreign products?
This one is a simple answer
Homemade goods will be uncompetitive against foreign goods?
Inflation is high, why can’t homemade products compete against foreign products
This answer is a bit longer
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- Homemade products will be more expensive than foreign products,
- Less people will buy the home made products
If homemade products increase their price what happens in terms of Balance of trade
There will be a balance of trade deficit.
Fewer people will buy our exports.
If ___________ demand is tooooooo low relative to___________ supply
what will occur?
- unemployemnt level increases
- Recession occurs.
In your own thinking, what does a recession mean?
Where the output of an economy decreases, for two successive quarters
i.e the aggregate supply of an economy decreases
Why does a recession?
- Aggregate demand is too low, therefore aggregate supply decreases resulting in people losing their jobs as firms need fewer people.
- companies liquidate
What does recession do to the unemployment level?
it increases the unemployment level.
What do you think the meaning of unemployment is?
The number of working-age people looking to have a job but are jobless. Lolllll
What policy comes together when trying to balance aggregate demand with aggregate supply?
Demand sided policy
What is a demand sided /supply sided policy,
what does it do in your own thinking????????????
supply sided policy -aggregate supply is balanced proportionally with aggregate demand
demand sided policy -aggregate demand is balanced with respect to aggregate supply
