Question
i'm working on a IB macroeconomics IA. here is what I have so far. My topic is interdependence. Let me know what changes to make
i'm working on a IB macroeconomics IA. here is what I have so far. My topic is interdependence. Let me know what changes to make and how to fix my diagram and such. Global supply chains have faced disruptions due to COVID-19, which has helped illuminate the interdependence in macroeconomic systems. As multiple economies are navigating through hard times, supply chain resilience has shown to be an important part of our economic stability, specifically in the United States. Due to increased supply caused by the pandemic, there have been shifts in consumer behavior which differs from the original links between production, demand, and distribution networks. This interdependence has shaped the economic recovery of the United States. Throughout these uncertain events, policymakers struggled to place into effect different strategies that help supply chain resilience and lower any systemic risks. The U.S. government has taken measures to strengthen supply chain resilience which addresses any systemic risks and lowers bottlenecks by implementing policies amidst this global issue.The first diagram illustrates change in aggregate demand (AD) which is demonstrated by the two shifts in the AD curve. The initial shift of AD2 moving to the right indicates that there is an increase in the aggregate demand which will result in a higher equilibrium price level (Pl2) as well as the higher level of real GDP (Y2). This helps demonstrate the improved effects on the economy, coming from a period of time where there was a low level of real GDP (Y2) and low aggregate demand. In contrast to this is the shift of AD3 to the left, which is a decrease in the aggregate demand and creates a lower real GDP (Y3) as well as a lower price level (PL3). These shifts in the aggregate demand curve are caused by changes in government and consumer spending as well as monetary policy.The second diagram exemplifies changes in short-run aggregate supply (SRAS), which we can see by the two shifts in the SRAS curve. The initial shift of SRAS3 shows the curve moving to the left which creates a decrease in SRAS. This shift then results in a higher equilibrium price level (PL3) as well as a lower level of real GDP (Y3). This then reflects the stagnant growth in the economy. In contrast to this is the shift seen by SRAS2 moving to the right which represents the increase in SRAS and leads to a lower equilibrium price level (PL2) as well as a higher level of real GDP (Y2). This demonstrates an expansionary effect upon the economy. These shifts in the SRAS diagram are caused by changes in input prices, technology, or government regulations. In this case of COVID-19, it is due to the change in technology of vaccines/masks, the raised costs of such medications, and government regulations of social distancing.
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