Macroeconomics the Four Indicators That Term Paper

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In the short run, Wal-Mart is likely to see benefit from the weak economy. The Fed is currently providing ample monetary policy stimulus, but for the most part the economy is either treading water or making only minor improvements. The expected short-term impact for each of these firms is expected to be the same, and minimal. The reason why the economic impact is minimal is because the general state of the economy has changed little in several months. Thus, fast-moving companies like Amazon and Wal-mart will have made adjustments to match the prevailing demand conditions. Thus, both of these companies should be in a state of equilibrium with respect to aggregate supply and aggregate demand at this point.

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When the recession first broke a few years ago, both of the companies would have likely found themselves with excess inventory, so that AS is above AD on the graph. Over time, however, either demand has risen or the two companies have simply adjusted to their new long-run economic reality. As a result, both firms should be in equilibrium at this point in the long, slow recovery.

With demand suppressed, prices will naturally fall, as reflected….....

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