Page 65 - DECO402_Macro Economics

Macroeconomic Theory

Notes on employment ON . Aggregate curve is also soar
2
above as Aggregate supply curve. As increasing
the level of employment, total production and total
cost are also increased. So firm keeps expectance of
‘low sell receiving’. When frontier cost is reducing,
then production in increment quantity is beneficial. Aggregate Supply Value (Income from Sale)
The shield of aggregate supply curve is increased
with the increment in the level of employment. It is
happen because low skills sources get employment
as relative on the increment in employment.
According to it the optimum ratio is disturbed
among different sources of production. Output
is always according to the descending resources Employment
or return of scale. In this way by increasing the
employment, the production is increase and Fig. 6.2: Aggregate Supply curve
therefore total expense will always increasing.
The shield of Aggregate supply value curve is increasing as whenever every source is not getting
employment.
Any increment in receiving sell and cost on full employment point can not increase the employment.
Total Supply curve becomes vertical on employment level ON . Aggregate supply curve on that
1
point becomes fully flexible on more national level. There will be no change in employment and
production level.

Notes The total addition of things and services in an Economy calls Aggregate
demand.

Self Assessment

Multiple Choice Questions:
4. Effective demand decide the level of income and ……………………………….
(a) employment (b) Unemployment
(c) cost (d) Curve
5. To increase the employment effective demand is………………………………by investment.
(a) decrement (b) Increment
(c) expenditure (d) None of these
6. Aggregate supply is the second important decider of………………………………………. the
level of income and employment.
(a) Dissimilation (b) Prkamya
(c) Equilibrium (d) None of these

6.3 Equilibrium Determination

The level of employment production and income is decided by the effective demand, which itself
decided by the aggregate demand and aggregate supply. The firm increases the employment at such

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