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ADI stands for Aggregate Demand and Inflation and AES stands for Aggregate expenditure scheduel. With that please answer the following: Create a country of your
ADI stands for Aggregate Demand and Inflation and AES stands for Aggregate expenditure scheduel. With that please answer the following: Create a country of your own (with a closed economy), which will begin at equilibrium. You will start by giving a brief introduction of your country's economic status, in relation to the identity "Y=C+I+G", stating what the GDP is, as well as what C, I, and G are (numerical figure). Create the AES framework for your country, using a scale for both axises, and determining the slope, based on your specific country, making sure to explain why your country has that slope. An event occurs in your economy, and you notice that your country is either dealing with a surplus or a shortage (you choose which), and you will then explain WHY your country is dealing with this issue. You will then create your ADI framework, and show the change that event causes, shift curves if any, and explaining thoroughly what exactly the country did to have that change. Determine whether the country focuses on stabilizing unemployment, or on stabilizing prices, mention the ADI framework. State what the central bank and government can do, to return to equilibrium (2 each). Choose whether the country goes to E2 or E3 (whether your government reacts or not),also explain and calculate by how much income would need to change, in order to fix the issue (eg: if your country has a surplus of $1200, by how much would they need to lower income by, to go back to E0) show the calculation as well (determine all the variables). Construct the Central Bank policy rule (in line with the slope made for the ADI framework) and also explain what changes would occur in the Central Bank policy rule framework, when going into your recession/boom, to regulate it
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