ABSTRACT WE WILL START THIS
ARTICLE BY DEVELOPING A CLEAR UNDERSTANDING OF THE TERMS AGGREGATE SUPPLY AND
EMPLOYMENT STARTING OFF WITH AGGREGATE SUPPLY TO UNDERSTAND ITS TERMINOLOGIES
AND THE FACTORS THAT ARE RESPONSE INCLINE OR DECLINE, ALONG WITH AGGREGATE
SUPPLY CURVE AND UNDERSTANDING IT, THEN COMING THE TERM “EMPLOYEES” AND WHO ARE
THEY BEFORE CONCLUDING EVERYTHING WE WILL DRAW A CLEAR CUT RELATIONSHIP BETWEEN
AGGREGATE SUPPLY ON THE EMPLOYEES. STARTING WITH THE TERM AGGREGATE SUPPLY (AS)
IT IS DEFINED AS THE TOTAL AMOUNT OF GOODS AND SERVICES (REAL OUTPUT) PRODUCED
AND SUPPLIED BY AN ECONOMY’S FIRMS OVER A PERIOD OF TIME.
IT OTHER WORDS IT IS MEASURE OF
VOLUME OF GOODS AND SERVICES PRODUCED EACH YEAR. THIS SUPPLY REPRESENTS THE
ABILITY OF A CERTAIN ECONOMY TO PRODUCE AND DELIVER GOODS AND SERVICES TO MEET
THE DEMAND.
IT CAN ALSO BE SAID THAT IS THE
MEASURE OF ONE’S STATE OR NATION’S ABILITY TO PRODUCE GOODS AT EVERY PRICE
LEVELS THAT IS USUALLY DESCRIBED IN A GRAPHICAL FORM. THE COMPONENTS (GOODS)
THAT AGGREGATE SUPPLY CONSISTS OF ARE CONSUMER’S GOODS PRIVATE CONSUMER GOODS
PRIVATE CONSUMER GOODS LIKE MOTOR VEHICLES, CLOTHES AND ENTERTAINMENT ARE
SUPPLIED BY PRIVATE SECTOR. FOR A DEVELOPED ECONOMY THIS THE SINGLE LARGEST
COMPONENT OF THE AGGREGATED SUPPLY.
CAPITAL GOODS SUCH AS MACHINERY EQUIPMENT AND
PLANTS ARE SUPPLIED TO VARIOUS FIRM, THESE ARE SIGNIFICANT FOR IN ORDER TO
INCREASE IN ECONOMY ABILITY TO SUPPLY GOODS TO THE PRIVATE SECTORS. PUBLIC AND
MERIT GOODS GOOD AFTER GOING THROUGH THE TYPES OF GOODS THAT ARE INCLUDED IN
THE AGGREGATED SUPPLY LETS GO OVER THE MAJOR FACTOR THAT AFFECTS THE AGGREGATED
SUPPLY ALSO KNOWN AS “CETRIS PARIBUS”
THAT DEFINES THE NATIONS/STATE SUPPLY ARE THE PRICE OF THE GOODS, HAVING
A MEASURE EFFECT ON THE SUPPLY OF A CERTAIN GOODS RELATED TO THEIR DEMANDS, FOR
EXAMPLE IF THE PRICE OF A COMMODITY IS TOO HIGH ITS DEMAND WILL CERTAINLY
BECOME LOW, SIMILARLY IF THE PRICE WILL ALSO BE MORE, THUS THE COMMODITY HAVING
THE HIGHEST DEMAND WILL BE PRODUCED IN ABUNDANCE RELATIVE TO THE ONE HAVING
LESSER DEMAND.
THE MORE THE PRODUCTION THE MORE THE INCREASE IN THE NATIONS
AGGREGATED SUPPLY ARE THE PRICE OF LABOR FORCE, LABORS ARE A CRUCIAL PART OF
ANY ORGANIZATION WITHOUT WHICH THE PRODUCTION CAN BE COMPLETELY PARALYZED,
HOWEVER HAVING MORE LABORS DOESN’T ALWAYS MEAN THAT THE COMPANY WILL PROSPER IN
ITS HAVING EXTRA WORK FORCE IS ALWAYS BETTER AND IT INCREASES THE OVERALL
PRODUCTION, THUS IN TURN INCREASING THE OVERALL SUPPLIES BUT THE WAGES OF THE
LABOR ALSO COMES INTO PLAY IF THE COMPANY STARTS OVER HIRING PEOPLE THEY WILL
ALSO HAVE TO PAY EXTRA AND WILL HAVE TO RESORT TO INCREASING THE PRICE OF THEIR
SUPPLY TO MEET THE EXPENSES.
PAYING MORE EXTRA WAGES IS ALSO NOT GOOD AS IT
ALSO DECREASES PRODUCTION AND INCREASES EXPENSE, SO EVERY THEIR SUPPLY, WHICH
BENEFICIAL FOR THE OVERALL AGGREGATED SUPPLY. PRICE OF INPUT, THE COST OF RAW
MATERIALS LIKE STEEL, IRON ETC. OR THE EXPENSE OF ENERGY AND GRS REQUIRED FOR
IN ORDER TO MANUFACTURE A CERTAIN PRODUCT ALSO PLAYS A KEY ROLE IN DETERMINING
THE OUTPUT OF A SUPPLY, FOR EXAMPLE IF THE COST OF RAW MATERIAL IS HIGH SO DOES
THE COST OF PRODUCTION THUS LIMITING PRODUCTION, BUT WHEREAS IF FOR SOME REASON
THE COST OF RAW MATERIAL LIKE OIL AND FUEL DECREASES THUS IN THAT CASE THE
PRODUCTION WILL INCREASE BECAUSE OF THE LOW PRODUCTION COST.
THUS IT STATES
THAT THE HIGHER THEN TECHNOLOGY, THIS IS ONE OF THE MOST IMPORTANT FACTORS IN
ITSELF AND CAN HAVE A SIGNIFICANT INCREASE IN THE SUPPLY DEPENDING ON THE
ADVANCEMENTS AND IMPROVEMENTS IN THE OVERALL EFFICIENCY OF THE PRODUCTION.
HAVING NEWER TECHNOLOGY IN PLAY NOT ONLY INCREASES THE OVERALL EFFICIENCY BUT
ALSO REDUCES THE WORK TIME FOR PRODUCTION THUS INCREASING SUPPLIES, ALSO USING
TECHNOLOGY MANY PROCESSES CAN BE AUTOMATED CUTTING DOWN LABOR COST AND
INCREASING PRODUCTION. THUS WE CAN SAY THAT AN INTRODUCTION OF NEWER MUCH MORE
ADVANCEMENT IN TECHNOLOGY IS ALWAYS GOOD FOR INCREASING THE AGGREGATED SUPPLY.
THE VALUE OF CAPITAL STOCK, IT IS THE AMOUNT OF MONEY AVAILABLE IN AN ECONOMY
FOR IN ORDER TO INVEST IN BUSINESS TO PURCHASE THE NECESSARY ITEMS USED FOR
PRODUCING GOODS AND RESELLING THEM FOR FUTURE PROFITS, THUS MULTIPLYING THE
CAPITAL STOCKS. USING A CAPITAL STOCK, THE PRODUCING BUSINESS CAN INVEST IN
BUYING MORE EFFICIENT MACHINERIES AND PAY FOR MORE WORKERS FOR IN ORDER TO
INCREASE THEIR PRODUCTIONS.
HAVING A GOOD CAPITAL STOCK IS THE AIM OF EVERY
ECONOMY TRYING TO PROSPER, WITHOUT WHICH THE INVESTMENT GOES DOWN AND
PRODUCTION SLOWS. SO IN SHORT KEEPING A GOOD CAPITAL STOCK FOR INVESTMENTS IS NECESSARY
FOR INCREASE IN AGGREGATE SUPPLY FOR A NATION, AS IT DECREASES SO DOES THE
AGGREGATE SUPPLY AGGREGATE SUPPLY CURVE AFTER GOING OVER THE FACTORS THAT
AFFECT THE AGGREGATE SUPPLY NOW LET’S HAVE A LOOK AT ITS SUPPLY CURVES, WHICH
SHOWS THE QUANTITY OF GOODS AND SERVICES PRODUCED BY THAT NATION OR ITS
SUPPLIERS.
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