Chap Review the Organization That Term Paper

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The general policy goal vis-a-vis inflation is to have growth in inflation over time but it should be a slow and steady rise with little to no falling at any point.

Chapter 11

The 11th chapter is about aggregate supply and demand curves. Macroeconmics is described as a "bird's eye view" of the economy. The book then talks about stability or lack thereof and then discusses the self-adjustments, flexible prices and flexible wages of the classical theory. The book then talks about Say's Law, which is that "supply creates its own demand." The advent of Keynesian economics in the 1930's is then discussed, as this was clearly in response to the economic travails of the late 1920's and 1930's (and even the early 1940s') Keynes, unlike classical economists, said that there was no self-adjustment and that government could and should make investments to kick-start the economy.

The book then talks about aggregate supply and demand and how they interact with each other and how the feed off one another. Where those two curves intersect will determine the equilibrium price and there are consequences if the price is too high or too low relative to that interaction because things like shortages and inventory gluts can occur.

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An equilibrium is when what is demanded matches what is supplied. If prices are too high, then supply will go unsold. Too low and the inventory will run out before the demand is satiated.

The stated problems of equilibrium are undesirability and instability. Other problems that can creep up are higher unemployment, inflation spikes (or drops), and so forth. Other undesired outcomes include unexpected shifts in aggregate demand or supply or an ongoing cycle of the same. The book then talks about short-run instability and how demand-side theories (e.g. Keynesian ideology) conflicts with supply-side proponents' thought patterns. There is also the concern of monetary policy and more eclectic definitions and explanations about what goes on with economics. The book talks about policy options such as monetary policy, fiscal policy, supply-side policy and such and how those levers can be used to supply the demand or supply curves in a desired direction. The chapter concludes by summarizing how different policies have been used over the years ranging from the 1960's to the current Obama administration......

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