Question

EXPLAIN MACROECONOMIC THEORY AND HOW IT RELATES TO THE ECONOMIC INDICATORS DATA USING AS AND AD. THIS OVERVIEW SHOULD DISCUSS THE IMPACTS ON INFLATION,GDP,ECONOMIC GROWTH AND U USING THE CLASSICAL MODEL, the Keynesian model and the supply side model

Answer 1

The principle of Aggregate Supply and Aggregate Demand has been given an important role in various theories of the economy. When there is an increase in the money supply in the economy of any country, there is an increase in the demand in the market due to the increase in production there and due to the availability of employment opportunities. Which further increases the production of goods. As a result, there is an increase in GDP in the economy but as the money supply increases. However, due to increase in purchasing power, inflation of goods starts to increase, which is a negative effect of increase in money supply. Because of the huge increase in money supply. There is an increase in aggregate demand in the economy which is seen as inflation when it is higher than the aggregate supply. On the contrary when production increases due to increase in additional money supply. It also increases the GDP of the country. Because it can be exported when production increases, which is necessary for any economy in this era of globalization.

Keynesian and classical theories show the relation of demand and supply on the same grounds as above. On the basis of which the economy of any country can be determined.