Final project Essay Example | Topics and Well Written Essays - 1250 words - 5

Final project - Essay ExampleAggregated demand curve represents the overall amount of goods that are demanded at different price level. Second model that has been employed is IS-LM Model, and the third model is Keynesian modelThe concept of accumulate demand is that gain in total demand of products cause to increase the output that lead to the increase demand of labor. If the aggregate demand is lower it will cause to subside the output and lead to decreased demand of labor (Anderton, 590). As in the case of United Kingdom economy is facing decrease in aggregate demand due to the fiscal crisis because this crisis made a significant impact over the purchasing power of people. People who have money are parsimoniousness rather spending their money. This decrease in demand is leading country towards decrease output, therefore, towards unemployment because firms working in the economy do not require workers to urinate output. It has been observed that uncertainty shocks cause to slo w down the demands. Therefore, economies have to face higher inflation rates. Such as in United Kingdom, the financial crisis showed broad uncertainty in the financial market that slow down the demand of goods market and result occurred in lower economic growth and increased unemployment rate. For example, the 2008 financial shock reduced the purchasing power of households. By using the right of postponing the purchases, households forced the firms to reduce the manufacturing and in result made delays in new hiring and increased firings of employees that contributed in high unemployment rate. The uncertainty increased the unemployment from the year of 2009 to 2013 in United Kingdom and now the effects are slowing down (Leduc & Liu, 1-30).Increase in the lowering demand of labor is high this time as compared to prior shocks of 1981. This is because this time the zero lower bound restrained the monetary policy on the nominal interest rate. As it has been observed that uncertainty sh ocks reduced the