Economic

Introduction

In present era it is important to understand all different aspects of economy and their effects as well. In this report we will define the definitions of all important aspects and understand different concepts related to economics. We will also analyze their impact on economics with relevant examples.

1) GDP and its Relationship With Standards Of Living

Real GDP: It is the concept of macroeconomics which shows changes in final output due to modification in price. It shows real growth of an economy (Tribe, 2015.). Nominal value of GDP shows all goods and services produced in a country within one year. Nominal GDP can be increased due to inflation but final output remains constant, to calculate real GDP rate inflation must be subtracted from nominal GDP so that the country can measure its real growth. Standard of living: In simple words standards of living can be say all material goods which helps to raise comfortable level of a person on particular social economic environment. . For economics, real GDP is divided by the total population of a country which is called as GDP per capita. This shows standard of living. Real GDP might be not a good indicator to define the standard of living of country. GDP is measured on the basis of final goods and services which are produced in a country within the specific time (Davis,2013). It does not show the improvement in human life or environment conditions, education, pollution and especially in the underdevelopment countries. All theses factor also impact the standard of living of a country. Real GDP does not count on economic activities to measures standard of living.

2) Reasons of Unemployment

There are several factors which affect the employment rate. Unemployment is measured by total numbers of unemployed workers divided by total labor force. Factors which affect the unemployment rate are given below.. Technology: Rise in use of technology reduces the contribution of human efforts. For instance, use of robots in automotive industry replaces unskilled labor force. By using technology in the industry, it increases number of unemployed people.(Barberis, 2013) However, it also increases demand for the services labor but demand is comparatively low than supply so unemployment rises. Globalization: There are lots of changes witnessed after globalization. Companies are expanding their business from their home town to another country (Tullock, 2013). This process allows the developing countries to exploit their natural resources and take advantages of competitive business environment. They also offer cheap labor cost to attract more export process. Like china who produced the cheapest labor products to world and other country become more dependable on china (Reich, 2014.). So other country reduced their home production and shifted to imported goods which increased unemployment in other country. There are always some unemployment which are totally unavoidable because there are no relations of their employment and econmoic conditions of country For example, a fresh graduate individual who is searching for job does not qualify because of its low skills and knowledge. In some country, labor force may be higher but potential workers are very low like china where number of aged people is more than potential workers so this situation also increases unemployment. In that case it is better to avoid unemployment.

3) Inflation

Inflation: Inflation is described as will increase in fees of items and offerings specially time. Inflation fee is immediately associated with growing fees. In economics wherein fees of products and offerings are will increase inflation is additionally will increase however most effective rises in fees of family profits or vital items (Bazilian, Onyeji. and Zhengrong, 2013.). When call for for trendy items and offerings is will increase then fees additionally will increase because of this inflation is likewise arises. For instance whilst fees of products begin growing human beings watching for extra inflation in future in order that they growth their intake for items and fees is going up. If pastimes fee is decreases then in marketplace cash deliver is likewise will increase. This additionally enhance patron shopping energy in marketplace so inflation is likewise will increase. There are mainly form of inflation call for pull inflation and value pull inhalations witch effect via way of means of the rises in trendy charge stage of products and offerings. Inflation isn't most effective have an effect on the rises in fees of products and offerings. If fees of products are stays equal however deliver of cash is will increase seeing that will increase of manufacturing of products and offerings. If cash deliver is flawlessly matched with will increase manufacturing of products then trendy fees stage stays equal and inflation will now no longer growth.

Aggregate demand: The aggregated demand curve shows that the total demand for goods and services in a given period is . The aggregated demand curve shows the possible price levels of goods that can be bought by consumers. In macroeconomics , the decline in the general price level is referred to as deflation. Of goods and services are declining, the demand curve is falling. The reasons for the downward trend in the demand curve are the recession (Meek, 2013). During the recession, prices of goods and services fell continuously due to the low purchasing power of consumers. To increase the sales of their stores. Sometimes the demand curve can drop because the technology is able to produce cheap products for consumers (from Bekker-Grob, Ryan and Gerard, 2012). . Other proportions of the falling demand curve are imported goods.Some countries have fewer or cheaper workers than other countries like China, which produces more cheap products compared to other countries, so competition in the local market starts in the importing country to keep prices down. Curve.

5) Long run and short-run supply curve

Long run aggregate supply curve: In long run supply curve, it is assumed that there are no fixed factors of productions and only capital, labor and technology can affect aggregate supply curve and at this point in economy everything assumed remains constant. In long run, supply curve can be changed if production quality will be changed. Long run supply curve is vertical: In long run supply curve is not agffect by the small changes. . LAS is vertical because at this point it shows potential output of an industry(Eichholtz, Kok. and Quigley, 2013). For example, if in a country if there is rise in employment rate then the industry also raises its production even prices of inputs increases. Long run supply curve is vertical because of potential output is unaffected by prices level. Short run aggregate supply curve: It shows relationships between price level and output. It shows actual production willingness of produce by an industry during specific period in a country. Aggregate supply curve upward sloping: In short run, wage rate is fixed because higher prices of goods and services makes the output more profitable and industry get low price labor for their production so supply curve is becoming more upwards sloping(Stevenson, Balada-Llasat . and West, 2012.). At this point, industry hires low price products to increase their profits.

Conclusion

From above report we conclude all facts of economics and how does it affect economic of a country. We learn all important concept s about GDP and its relation with standards of living, long run and short run supply curve aggregate demand and its reasons of its downward sloping curve. From above report we also conclude about all important factors that can affect an economic.

References

• Tribe, J., 2015.The economics of recreation, leisure and tourism. Routledge.

• Davis, J. B., 2013.The theory of the individual in economics: Identity and value. Routledge.

• Barberis, N. C., 2013. Thirty years of prospect theory in economics: A review and assessment.The Journal of Economic Perspectives. 27(1). pp.173-195.

• Tullock, G., 2013.Economics of income redistribution. Springer Science & Business Media.

• Reich, P. B., 2014. The world‐wide ‘fast–slow’plant economics spectrum: a traits manifesto.Journal of Ecology. 102(2). pp.275-301.

• Bazilian, M., Onyeji, I. and Zhengrong, S., 2013. Re-considering the economics of photovoltaic power.Renewable Energy.53. pp.329-338.

• Meek, R. L., 2013.Economics of physiocracy. Routledge.

• de Bekker‐Grob, E. W., Ryan, M. and Gerard, K., 2012. Discrete choice experiments in health economics: a review of the literature.Health economics. 21(2). pp.145-172.

• Eichholtz, P., Kok, N. and Quigley, J.M., 2013. The economics of green building.Review of Economics and Statistics. 95(1). pp.50-63.

• Stevenson, K. B., Balada-Llasat, J. M.. and West, J., 2012. The economics of antimicrobial stewardship: the current state of the art and applying the business case model.Economics. 33(4). pp.389-397.