Macro Economics

MACRO ECONOMICS

Table of Contents

1. The aggregate demand and the aggregate supply( AD-AS) Model 2

1.2 Aggregate demand (AD) 2

1.3 Changes in aggregate demand (AD) 2

1.4 Changes in aggregate supply (AS)...................................................................................................3

1.5 Monetary policy 4

1.6 Fiscal policy 4

2. DIFFERENT BETWEEN MACROECONOMIC OBJECTIVE AND SOCIO CONOMIC OBJECTIVE 4

2.1 Macroeconomic objective 4

2.2 Socioeconomic objective 4

3. Recent measures that have been implemented in South Africa 5

3.1Unemployment, Poverty reducton, Fast economic growth 5

3.2 Social grant.....................................................................................................................................6

3.3 Fiscal policy...................................................................................................................................6

3.4 Monetary policy..............................................................................................................................7

The aggregate demand and the aggregate supply( AD-AS) Model

The AD-AS model is the most popular macroeconomic model used nowadays. The model deals with the general level of prices in the economy, instead of the price of a particular good or service. Likewise, the model deals with the total production of goods and services in the economy, instead of the quantity of a particular good or service . (Mohr et.al,2004:512).

* 1.2 Aggregate demand (AD)

AD is the collective amount that households and firms plan to spend on goods and services at each price level. The relationship between the price level and the amount of real GDP demanded is negative. The AD curve is induced to shift by any of the factors that induce the aggregate expenditures function to shift. An increase in total expenditure will shift the AD curve to the right. A decrease in total expenditure will...