Aggregate Demand and Supply Models
The following report will detail out the current state of the U.S. Economy. The report will discuss the following:
* Current economic state in regards to unemployment, expectations, consumer income and interest rates
* The existing effect of the economic factors on aggregate demand and supply
* Fiscal policies that are currently being recommended by government leadership
* The effectiveness of those fiscal policy recommendations from the Keynesian and Classical model perspectives.
Unemployment rates fluctuate when the supply and demand for human resources are out of balance. The supply and demand are a result of the interaction of economic, policy and structural factors. Economic factors affect both supply and demand. The demand for goods and services increases production which results in the demand for workers, increasing the employment rate. The common thought among economists is that market-driven economies move in cycles and when they drop below certain levels unemployment may result. The moving of production from high wage countries to low wage countries is another factor that increases unemployment. A declining manufacturing sector will result in not enough jobs to go around along with third world competition. While new jobs are being created in the technology and service sectors it is not enough to make up for the amount of jobs that have been lost due to moving the manufacturing of goods out of the U.S.
Structural factor are those that are affected by the aging of the population, migration patterns, skills set available, environmental regulations the technological changes. Some individuals are not able to take advantage of job opportunities because they lack the skills required to perform certain jobs. Education and training are both factors that…...