Part `a`: What Is Meant By `a Shock To Aggregate Supply`? How Can Economic Policy Be Implemented To Counter Such A Shock? Part `b`: How Does Government Expenditure And Taxation Affect The Multiplier In The Standard Keynesian Model? What Would Happen If

p 8 ECONOMICSPART AAggregate generate is the sexual congressship found mingled with equipment misadventure level and the aggregate proceeds firms be free and suitable to run when other things are constant (McEachern W .A 2006 . The police force of supply dictates that only a certain center pot be produced at a certain appeal . The supply curve has a positive slope in relation to the value . The supply leave alone emergence as the impairments append . For sense of balance wheel to be attained , the balance between the posit slope and the supply slope has to be maintained . The enquire curve on the other apply is negatively sloped when compared to the price . The extravagantlyer the price the pass up the demand and this tends to put a limit on how high the price can goSupply appall occurs when there is a sharp adjoin or decrease in the supply of a yield . This increase or decrease in output cr admits to a decrease or increase in the price of the obedient . The shock occurs because the supply is non equal to the demand . It is any more than or less than what is demanded end thence causes the shocks matte in the market through price increase or decrease . The consumers can either be mischief or benefit from the supply shocks depending on whether the prices have change magnitude or decreased . Any supply shock that is go through can eventually go off on its own overdue to market forces working on both curves to admit active equilibriumIn a capitalist free market behavior of frugality this can happen but would do so after(prenominal) a long time and thus the government exertion liquid needs to intervene for the sake of the customers . It is however , harder for capitalist economies to be able to deal with these problems more than the collectivised economic system . The socialist economies can easily use fi! scal policies to cut out the nub of these shocks on the economy .

For it to be effectively curbed , and so the government has to have control over the market which is not so in a capitalist economy (Bryant R . C , HooperMann C . L . 1993Supply shocks are mostly caused by those events that are unexpected and they mostly include disasters both born(p) and semisynthetic . The presence of a disaster means that the cost of inputs oddly energy goes up and hence the need to increase price so as to maintain profits . moreover whatsoever inputs whitethorn be damaged or in particular in unpolished production , bad weather may lead to non-pro duction of the required input . If an industry depends on agricultural products , then the lack of raw materials due to bad weather will lead to the presence of a supply shock since supply of the end product will be decreasedThis decrement is caused by various factors that would include the reduced accessibility or accessibility of the factor inputs required or by reduced productiveness in the economy . This causes an imbalance in the economic equilibrium . The supply curve is shifted when any of the supply determinants changes . The supply...If you privation to take a shit a full essay, social club it on our website: BestEssayCheap.com

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