Economic Theory Of Stimulating Aggregate Demand Essay

Imagine that you have decided to open a small ice cream stand on campus called "Ice-Campusades." You are very excited because you love ice cream (delicious!) and this is a fun way for you to apply your business and economics skills! Here is the first month's scenario--you order the same number (and the same variety) of ice creams each day from the ice cream suppliers, and your ice creams are always marked at $1.50 each. However, you notice that there are days when ice creams remain unsold but other days when there are not enough ice creams for the number of customers.

a. What would shoppers see when they shopped in Wal-Mart and the other “big box” stores that sell so many imported items?

The objective of the American Recovery and Reinvestment act, also known as the “stimulus” was to end the recession that had occurred in 2008. The recession had a major impact on the U.S job market. The United States congress approved the act which consisted of an investment of 787 billion dollars in order to encourage customer spending and also to save old jobs and create new ones.

The federal government played an active role in combating both the Great Depression and the Great Recession. Roosevelt’s New Deal was a series of programs that worked to provide relief and recovery to Americans. During the Great Recession, Obama passed the American Recovery and Reinvestment Act of 2009 (Recovery Act), which is considered by many to be a response similar to that of Roosevelt’s in 1933. According to the U.S. Department of Education, the Recovery Act included measures to “improve our nation's

Recent medical advances have greatly enhanced the ability to successfully transplant organs and tissue. Forty-five years ago the first successful kidney transplant was performed in the United States, followed twenty years later by the first heart transplant. Statistics from the United Network for Organ Sharing (ONOS) indicate that in 1998 a total of 20,961 transplants were performed in the United States. Although the number of transplants has risen sharply in recent years, the demand for organs far outweighs the supply. To date, more than 65,000 people are on the national organ transplant waiting list and about 4,000 of them will die this year- about 11 every day- while waiting for a chance to extend their life through organ donation

In 2008, the housing market crashed, businesses were failing, and people were losing their jobs. This is how Barack Obama started off his presidency. Already, fingers were being pointed and cries were maybe. This would be the start off to Obama’s presidency. His creation of the Stimulus Package created a lot of criticism, but at the end of the day, it fixed the economy. Now Obama is ending his presidency with a flourishing economy and GDP Growth. Even if the Stimulus Package was one of the most criticized plans in his presidency, it did exactly what it was meant for, which was to fix the economy and create growth.

The demand side policies did not prevail in completely taking out the serious impacts of the economic downfall. During the great depression, unemployment rates skyrocketed, and businesses crumbled. Consumer spending decreased. During the great depression, fiscal and monetary policies were implemented by the Federal Reserve System in response to the economic decline. With the implementation of these policies stimulus packages were also put into place in February of 2008. The Economic Stimulus Act of 2008 contributed to over billions of dollars towards tax rebates to families in the United States. Tax rebate checks were sent out to families both lower and middle-class Americans. The effects of the stimulus package were significantly increasing the GDP and lowering the unemployment and adding jobs. Another success because of the polices was the real estate equity on housing which went up significantly (Reed, n.d.). Without these fiscal policies, the economy would continue to decline and unemployment would be on a

History helped to recognize the parallels between these eras and learn from them. The crisis of 2008 was not nearly as bad as the Great Depression, but like the Depression consumers lost trust in the market and were afraid to invest in the economy. The Housing Crash catastrophe, like the Great Depression contributed to the failure of banking institutions and led to high unemployment rates. Unlike the Great Depression, the crisis of 2008 was supported by more than a dozen economic stimulus packages provided by the federal government to jumpstart the economy. The federal government stepped in to bailout the banking institutions to avoid another Great Depression. It is important to look back on the history of these two national devastations and learn from their mistakes so we can be better prepared for future economic downfalls in the

The market price of a good is determined by both the supply and demand for it. In the world today supply and demand is perhaps one of the most fundamental principles that exists for economics and the backbone of a market economy. Supply is represented by how much the market can offer. The quantity supplied refers to the amount of a certain good that producers are willing to supply for a certain demand price. What determines this interconnection is how much of a good or service is supplied to the market or otherwise known as the supply relationship or supply schedule which is graphically represented by the supply curve. In demand the schedule is depicted graphically as the demand curve which represents the

The U.S has gone through a major economic struggle and is still fighting for stability. It is, also, undergoing a recession which occurs whenever gross domestic product and the total output of goods and services fall for two consecutive quarters. The 789 billion dollars stimulus package has not created many private sector jobs and the hundreds of billions in TARP money squandered by Treasury Secretary Geithner to bail out General Motors, Chrysler, Bank of America, AIG and Citigroup has not reached most business and working Americans (Peter Morici). Though the unemployment rate has decreased, it is because many Americans have stopped looking for jobs and are no longer in the unemployment rates. This, of course, does not show any improvement in the U.S economy. Most of the taxpayers’ money is being used to support illegal families with American-born babies; while, many illegal Mexicans are taking jobs from citizens who are desperately searching for jobs. With this unattended problem the country’s economical repair will be prolonged.

Everybody in the United Stated was affected by the recession that began in December of 2007 and spanned all the way to June 2009. Even though the recession is over, many people are still being affected by it and have still not been able to recover from the great recession. “The recent recession features the largest decline in output, consumption, and investment, and the largest increase in unemployment, of any post-war recession”. Many people lost their jobs due to the recession and some of them are still having a hard time finding jobs and getting back on their feet. Businesses

Fiscal policy: Given the breadth and depth of this recession, it was clear that the Treasury and the entire Obama administration had to take bold actions. In fact, right at the beginning, they were committed to a fiscal stimulus policy package which would be “substantial” enough to pull the economy out of the recession. The final stimulus package signed into law in 2009, the American Recovery and Reinvestment Act, was totaled $787 billion including about one-third tax cuts and one-third aid for states and the unemployed. Of the rest, labor health and education investment got 8%, and infrastructure investment got about 7%. It also included a large amount of government money to

The economic meaning of a recession is that the gross Domestic Product (GDP) has declined for two or more consecutive quarters. Unemployment rises, housing falls, stocks fall and the economy is in trouble. Whenever the government sees that the economy is entering a recession it is important for it to act. The U.S acted in two ways during the Great recession of 2008 through fiscal and monetary policies. Renaud Fillieule identifies that “ Monetary and credit expansions have been the main tools used by the U.S. government and central bank to try and recover economically from the Great Recession of 2008” (Fillieule r, Pg. 99 2016). These Keynesian policies are debatable among economist, none the less they were implemented and put the U.S on the road to recovery.

In this way, the Fed manages price inflation in the economy. So bonds affect the U.S. economy by determining interest rates. This affects the amount of liquidity. This determines how easy or difficult it is to buy things on credit, take out loans for cars, houses or education, and expand businesses. In other words, bonds affect everything in the economy. Treasury bonds impact the economy by providing extra spending money for the government and consumers. This is because Treasury bonds are essentially a loan to the government that is usually purchased by domestic consumers. However, for a variety of reasons, foreign governments have been purchasing a larger percentage of Treasury bonds, in effect providing the U.S. government with a loan. This allows the government to spend more, which stimulates the economy. Treasury bonds also help the consumer. When there is a great demand for bonds, it lowers the interest rate.

1) According to the Law of Demand, the demand curve for a good will A) shift leftward when the price of the good increases. B) shift rightward when the price of the good increases. C) slope downward. D) slope upward. Answer: C 2) An increase in the price of pork will lead to A) a movement up along the demand curve. B) a movement down along the demand curve. C) a rightward shift of the demand curve. D) a leftward shift of the demand curve. Answer: A 3) An increase in consumer incomes will lead to A) a rightward shift of the demand curve for plasma TVs. B) a movement upward along the demand curve for plasma TVs. C) a rightward shift of the supply curve for plasma TVs. D) no change of the demand curve for plasma TVs. Answer: