Question

What are the different effects between aggregate demand-based growth and aggregate supply-based growth?

Answer 1

Aggregate Demand Growth and Aggregate Supply based growth are the different types of economic measurement in the economy.

Aggregate Demand Based Growth :  

• It is the total sum of all goods and services produced in the economy of the nation.
• It was the total amount of money that can be exchanged between the goods and services on that country.
• It was measured by means of there market levels.It represent the total output at the means of price level.
• The aggregate demand equation depends on the factors are Consumption, Investment,Government spending,Net exports—exports minus imports  
• The aggregate demand based growth affects some economic factors,they are

(1) exchange rate of currencies : currency exchange rate is changed and when the currency rate of US id decreases,that means the importing of foreign goods increases and foreign goods numbers is increased and vice versa.

(2)wealth : wealth of the persons will be increase or decrease corresponding to demand will increase or decrease.

(3) Inflation changes expectation : purchasing of goods is based on the expectation of inflation.Hence the demand of the products varies depending on that

Aggregate Supply Based Growth:

• It is based on the growth rate of the total products that can be produced and sell on that country.
• It is also known as GDP in other words .According to the definition,it is the total output firms that can be produced and sell.
• The increasing of the growth rate of the supply based curve defines that the short run aggregate supply curve.That is The price level and the GDP is increasing positively.
• Aggregate supply curve increases profit level highly.Because the product cost is increased when the input cost is fixed.It makes the chances for high production.
• Aggregate supply curve provides exponential GDP level by attaining maximum profit level through labor encouragements, physical capital, technology, and institutions.