Government expenditure in relation to economics

Document Type:Essay

Subject Area:Economics

Document 1

In the intersection of the demand and the supply curve it simply means that in the market the amount of goods that are being supplied for sales is equivalent to the amount of the goods that the customer is buying. It also means that there Is no less supply of the goods and also at the same time there is no more ordering of the good than the demand. At this point, the suppliers and the consumers are said to have agreed to the terms of trade. The equilibrium price can also be called the market clearing price. Since there shall be no stock that shall be kept in the stores and at the same time there shall be no evidence of excess demand for the good.

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At this stage, some of the company might leave since they are not in a position to make the profit unlike the short long where the profit might be or can be supernormal profit. Due to the demand increase which then causes an increase in the price of the goods hence the supernormal profit is attained. The low demand usually causes the zero-profit making. Hence at this stage, its very hard for the company to achieve the supernormal profit since even the normal profit shall be a problem. ( Flach at, al 2011) 1. The GDP measures usually show the different monetary value of the product that is being produced by a company ranging from the fish to the cars and vehicles among other measures that are used.

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Dynamic The GDP Wealth measuring factor can be presumed to be dynamic in that there are constant changes that are observable in the figure since it usually measures the product consumption. Also, investment hence with the use of the GDP one can be in a position to incorporate the changes in the field such as the consumption, productivity and also the investment. With the changes happening the GDP can help in providing a good platform for comparing the differences that have occurred in the different areas and also in the different years making it possible to monitor the changes occurring. GDP per capita. a The Keynesian mainly concentrates on the relationship that is there between the aggregate and also on the income about the output or the GDP.

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For one to be in a position to find the equilibrium of the real income or the GDP can be illustrated using two approaches which are mainly the income aggregate approach on these approaches the equilibrium is attained as described below. With the use of the first graph, one should be in a position to draw the graph of the aggregate expenditure about the real gross domestic product. On drawing a line with does intersect the graph at a 45degree angle all the values that fall under the line that intersects happen to be the equilibrium points of the value that we are in search. Hence through the first diagram one can be in a position to conclude that the all the A=E are the value of the equilibrium that is according to Keynesian model or argument.

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