How will shifts in the aggregate supply and demand curve affect unemployment in an economy?
We’d need more variables, A LOT more variables for a real answer to such a complex mechanism as employment, but the basics are: as aggregate supply increases the value of the product decreases, and therefore demand decreases as the peoples needs are fulfilled, causing a decrease in price, eventually employers may or may not have to lay off workers, or cause increase in unemployment. As aggregate demand increases, that would IMPLY that there is an aggregate drop in supply, creating demand, spawning growth in that industry, causing nthe employers to hire more employees, reducing unemployment. But the problem here is, our economy is so complex, i’d need the variable of the strenght of the dollar in this case, as it fluctuates, what the market is doing, which is decreasing or increasing: supply or demand, as they can go any of 8 ways. You see, i need more variables, man!
