Economic Concepts Literature & Language Coursework (Coursework Sample)
In economics, the fundamental distinction between “long run” and “short run” is : the former is assumed to be a sufficiently long period such that all price levels (price of input and price of output) can change flexibly, while the latter assume the price levels are only partially adjusted.
Provide an example of real terms and nominal term respectively. Assume the economy is operating at its full-employment level. If, for some reason, the totally money supply in this economy doubles, what would be the impact on the real term and the nominal term in your example in the short run and in the long run? Briefly explain how.
The Social Welfare program is considered as a government transfer payment rather than government spending. Increasing spending on Social Welfare can shift the Aggregate Demand curve outward. Yet, normally, they are not likely to be adopted as public stimulation policies during recession.
Based on the above information, answer the following 2 questions:
a) briefly explain how a more generous social welfare program shifts the Aggregate Demand curve outward? Hint: which component of Aggregate Demand is affected by Social Welfare program?
b) Why do you think the government is reluctant to adopt such a stimulus policy tool? Hint: it is politically unpopular to undo a Social Welfare program. In this regards, what could be the potential impact on the Long-Run Aggregate Supply curve, if such a policy is implemented?
The answer of each question should be 100-300 words.
The study of economics encompasses many concepts, but majorly revolves around aspects that help households, businesses and the government to manage their costs in the allocation of the scarce resources. As a result, various key factors such as long run and short run have to be put into consideration. A long run refers to the period when the factors of production that include land, labor, and capital are flexible. The period is considered to be sufficiently long to such that the price of input and output can change variable. On the other hand, the short run identifies with the period when the price levels are only partially adjusted.
The two terms are closely intertwined with real and nominal terms in economics, especially during the periods when the economy is operating at full employment. Nominal term otherwise known as the nominal value refers to the current value of goods and services. It is the price quoted on the commodities in shops,
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