Talk about This

The aggregate supply-aggregate demand model can be useful in predicting macroeconomic consequences of policy actions (like tax cuts, government spending increases, regulatory actions, interest rate adjustments). It does not tell you about the distributional aspects of policy actions.

For instance, a regulatory requirement that all employers offer health insurance would shift the aggregate supply curve to the left, increasing prices and decreasing the real GDP. Does that make it a bad idea?

Would the impact of such a regulation on health care availability counteract these macroeconomic consequences in your mind?