Answer to Question #155428 in Macroeconomics for Suga

Question

Based on Keynesian analysis, aggregate expenditure consist of C, I, G and net export. As an economist, present your critical arguments on how strategies and recommendations in the 2021 budget can generate economic growth and social well-being. Explain by using graphs

Answer 1

Economists generally agree that economic development and growth are influenced by four factors: human resources, physical capital, natural resources and technology. Highly developed countries have governments that focus on these areas.

In the short term, economic growth is caused by an increase in aggregate demand (AD). If there is spare capacity in the economy, then an increase in AD will cause a higher level of real GDP.