Macroeconomics Theory Speech or Presentation Example | Topics and Well Written Essays - 500 words

Macroeconomics Theory - Speech or Presentation Example The AS curve will also shift upwards from the left margin to the right one. i. A negative inflation shock in the economy will lead to an escalation of the AS curve from the left to the right side of the graph. However, the AD curve will shift from AD1 to AD2 from the right to the left side. ii. The shifts in the AD curves from the right to the left margins of the graph will influence the new the output to reduce from the right to the left margin from Y1 to Y2 because of the reduced government spending. Therefore, the changes in G1 to G2 downwards in the vertical axis will lead to a reduction in the demand and production factors of the economy. The graph shows that the U.S economy will experience a period of in increased output in its markets because of the positive shifts in demand and supply. The positive inflation shock will lead to increased GDP and GNP following the subsequent increase in the buyers’ income levels and the marginal increase in the country’s total output. The financial crises will influence stagnation in the country’s output. It is evident that the output will be Y1 after a 3% increase in the government’s expenditure hence the prices will increase to cater for the increased level of demand in the absence of supply. b) The federal government should resolve to the use of tax cuts. The other alternative policy to restructure the country’s economy will be the implementation of price regulations that will coerce the producers to increase the output rather than the prices. c) The impact of the federal monetary policy in solving the financial crises at the short run period will lead to a shift in the production from Y1 to Y2, a factor that will influence the need for labor; hence, the employed people will affect the country’s GDP and