Question

Identify the foundations of economics

Analyze Supply and Demand

Analyze the drivers of economic growth

Describe the impact of shift in aggregate supply and aggregate demand

Examine the roles of money and banking systems within the United States

Examine the role of current and historical fiscal policies

Answer 1

Identify the foundations of economics

Foundation of economics refers to the use of economic principles in solving economic problems. Resources are limited but demands are unlimited, hence, here economic principles are used to use these limited resources to meet unlimited demands.

Analyze Supply and Demand

In free market economic system, demand and supply forces are used to solve the economic problems. Intersection of demand and supply forces decides the price level and quantity. Use of demand and supply forces in economic decisions making leads to efficiency in economic system or consumer welfare is maximized.

Analyze the drivers of economic growth

Saving, investment and technological developments are key drivers of growth rate. Increase in saving and investments drives up growth rate of economy.

Describe the impact of shift in aggregate supply and aggregate demand

Shifts in aggregate demand and supply are caused by the factors other than price level. Shifts in aggregate demand and supply also change the equilibrium level of output in economy. Fall in demand or downward shift in aggregate demand causes widespread unemployment and fall in output level.

Examine the roles of money and banking systems within the United States

Money and banking have critical role in US. Banking sector collects fund from surplus sector and provides it to deficit sector thereby causing rise in growth rate of economy. Monetary policy of central bank is operated through the banking and money system of economy.

Examine the role of current and historical fiscal policies

Currently government is moving from expansionary to contractionary fiscal policy. Historically, fiscal policy has been widely used to deal with recession. It was extensively used during the economic depression of 1929 and recently, in 2008 government used fiscal policy moderate adverse impacts of financial crisis.