Setting the Equilibrium, Essay Example

Understanding the AS-AD Dynamic in U.S. economic policy

In a supply sided economy, aggregate supply (AS) economic measures by the U.S. federal government are linked to modified Keynesian monetary policies, and aggregate demand (AD) interpretations are seen as reactionary to the flux in supply based decisions partly spearheaded by allocations to public expenditures that a set to increase market investment through trade with private business. To stabilize inflation, and promote employment which is not currently contributing to capital flows to the extent that it normally would, all factors related to the simple cash/credit dynamic must be taken into account as consumer spending is retracted accordingly.

Disequilibrium in prices and wages is ultimately the baseline assumption in predicting appropriate measures to hedge against excessive inflation rates, and toward development of competent fiscal and monetary policies to guard against radical market fluctuation.  At all times, steady inflation offers the control mechanism toward a healthy futures market, and investment potential will obviously be connected to this factor. Market expansion will only be realized if risk is sufficiently constrained.

Analysis of projected stockholder investment in the world financial markets and parallel outlays in consumer goods purchasing is subsequent to most fiscal and monetary policy, as government cannot run after private decision making and the ongoing shifts in the market. Retraction of spending in some public sectors might lead to increased spending by consumers, yet followed by downward trends in spending across the board. Restricted cash means restricted growth, and contractionary stagnation of the market stands to lessen the robust potential of the AS-AD dynamic in general, rather than mutual expansionary growth.