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Homework answers / question archive / Aggregate Demand and Supply: Around the World Myanmar's transition to a democratic nation in 2012 has had significant impact on aggregate demand in the country
Aggregate Demand and Supply: Around the World Myanmar's transition to a democratic nation in 2012 has had significant impact on aggregate demand in the country. Each of the events described leads to a change in one component of aggregate demand. Move each item to the appropriate category, depending on which component is affected. Consumption Investment Government spending Net Exports Answer Bank New jobs have been created, increasing consumer confidence about the future of the economy. Government-run schools have received increased levels of funding. Thousands of tourists have entered Myanmar spending money at local restaurants and shops. Increases in property values have led to an increase in wealth for individuals in Myanmar. Government deregulation has made businesses more optimistic about the future. Programs have been initiated by the government to build infrastructure, such as roads and bridges, in Myanmar. Access to capital has made it easier for businesses to expand their operations.
1. New jobs have been created, increasing consumer confidence about the future of the economy : If new jobs are created in the economy then the disposable income of a consumer increases and the consumer spends more money in the economic activities.
-Consumption Increases.
2. Government run schools have received increased levels of funding : Government run schools receive funds from government it self.
-Government spending increases.
3. Thousands of tourists have entered Myanmar, spending money at local restaurants and shops : When tourists visit a home country then the home economy give services and hospitality to tourists. And the tourists bring valuable foreign-exchange into the economy. The local economy increases its net exports.
- Net exports increases.
4. Increase in property values have led to increase in wealth for individuals in Myanmar : When the value of an individual's wealth increases, then the confidence in him increases, the consumption increases.
-consumption increases.
5. Government deregulation has made business more optimistic about the future: Private sector of the economy looks for more and more profits in the economy and they look for producing more goods when there is less government regulation on production.
- Investment Increases
6. Programs have been initiated by the government to build investment such as roads and bridges: When government invests in infrastructure then government spending increases and it is easy for the businesses to reach to the remote locations through newly constructed roads so that they will have expanded markets. Businesses can also invest more in hetherto unreachable areas.
- Investments and government spending increases.
7.Access to capital has made it easier for businesses to expand their operations: Access to capital increases money in the hands of investors so new investments take place. With new investments new jobs are created consumption increases.
- Investments and consumption increases.
Different macroeconomic parameters are interdependent and will have cyclical effects on the economy. So if on the parameters is afffected some or the other way the remaining parameters also get affected.
