Simulation What Were the Effects Term Paper

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Production increases to adjust supply to meet this increase in demand and unemployment falls.

3) How can you apply what you learned from the simulation to your workplace?

Employers need to follow government fiscal policy to monitor how their own operations should adjust to economic conditions. Unemployment occurs when prices and wages do not fall in face of excess supply of labor and goods because they are rigid and adjust slowly. Therefore, in the short run, businesses have to decrease production. In the long run, all prices are wages are flexible so that the markets achieve equilibrium. Businesses can lower wages and decreases their prices. Wages decline until the surplus of labor is gone. And, prices decrease until the fall stimulates demand for goods. Eventually there is full-employment production.

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One of the most important economic indicators to look at when financing a large purchase is inflation. If the interest rate is lower than inflation, the borrower benefits and would benefit by financing a large purchase through credit. This is because the real inflation-adjusted value of the money that the borrower would pay back would be lower than the real value of the money when it was borrowed

4) What were your Growing Further results for the assessment?

Changing fiscal policies involves trade offs. As expansionary polices take effect, they typically achieve their desired objectives or increasing real GDP and decreasing unemployment. However, continued increases in aggregate demand eventually move the economy out of recession into an inflationary economy. At this point, fiscal policies will….....

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