This achievement standard involves describing the aggregate level of economic activity and how the aggregate demand and aggregate supply model is used. It also requires describing influences on New Zealand’s aggregate economic activity.

Description of how the aggregate demand and aggregate supply model is used will involve a selection from:
· reasons for the downward slope of the aggregate demand curve
· shifts of the aggregate demand curve as a result of changes in consumption, investment, government revenue and spending, exports and imports
· reasons for the aggregate supply curve becoming steeper as the economy approaches capacity output
· shifts of the aggregate supply curve as a result of exogenous changes in nominal wages, imported factor costs and productivity
· aggregate demand/aggregate supply equilibrium in terms of price level, employment and national income (= output = real GDP).

Description of influences on New Zealand’s aggregate economic activity will involve a selection from:
· Monetary Policy
Ø the roles of the Reserve Bank (Reserve Bank of New Zealand Act 1989 and the Policy Target Agreement)
Ø the effect of a change in the official cash rate on market interest rates
Ø the effects of interest rate changes on consumption, investment, exchange rates and net exports.
· External Influences
Ø supply and demand analysis of the foreign exchange market
Ø impact of exchange rate changes on the balance of payments (current, capital and financial accounts)
Ø terms of trade
Ø other factors that impact on trade.
· Fiscal Policy
Ø changes in tax rates (direct or indirect)
Ø government revenue and expenditure, and the operating balance
Ø major components of the government’s budget (reference: Current Economic Fiscal Updates)
Ø constraints imposed on government by the Public Finance Amendment Act 2004.

Fully explain influences on New Zealand’s aggregate economic activity will involve a further selection from:
· a full analysis of the effects of policy changes on components of Aggregate Demand and Aggregate Supply and, therefore, on the level of aggregate economic activity
· a thorough understanding of the interrelationships in the macroeconomy.
What is Aggregate Economics?



Aggregate economic analysis is concerned with issues related to macroeconomic issues such as gross domestic product, national income, inflation, unemployment rates and economic fluctuations (known as business cycles). Contrast this with microeconomics, which focuses more on consumers and firms rather than nation's economy as a whole. Many college courses in intermediate macroeconomics deal with aggregate economic measures.
  1. Identification

    • Aggregate demand and supply are key issues in aggregate economic analysis. Aggregate demand and supply measure the total demand and supply of goods and services across an entire economy. This contrasts with microeconomics, which is more concerned with supply and demand for specific goods. An example is the supply and demand for oil.

    Benefits

    • Aggregate economic analysis helps government leaders determine the state of the overall economy, setting their monetary and fiscal policies accordingly.

    Features

    • Because governments use fiscal and monetary policies to stimulate or curb aggregate demand and supply, aggregate economic analysis is concerned with the impact of fiscal and monetary policy on macroeconomic indicators such as the inflation rate or the unemployment rate.

    Effects

    • Under aggregate analysis, when aggregate demand rises faster than aggregate supply, inflation rises. Lagging aggregate demand, meanwhile, may be a sign of an economic recession.

    Considerations

    • Economists often differ on the proper role of government in promoting stable prices, economic growth and low levels of unemployment.

    Leading Indicators



Read more: Aggregate Economic Analysis | eHow.com http://www.ehow.com/facts_5312128_aggregate-economic-analysis.html#ixzz1JXnTutzN

What is macroeconomics?

Macroeconomics (from Greek prefix "macr(o)-" meaning "large" + "economics") is a branch of economics dealing with the performance, structure, behavior, and decision-making of the entire economy. This includes a national, regional, or global economy.[1[[http://en.wikipedia.org/wiki/Macroeconomics#cite_note-blaug1985-0|]]][2[[http://en.wikipedia.org/wiki/Macroeconomics#cite_note-1|]]] With microeconomics, macroeconomics is one of the two most general fields in economics.
Macroeconomists study aggregated indicators such as GDP, unemployment rates, and price indices to understand how the whole economy functions. Macroeconomists develop models that explain the relationship between such factors as national income, output, consumption, unemployment, inflation, savings, investment, international trade and international finance. In contrast, microeconomics is primarily focused on the actions of individual agents, such as firms and consumers, and how their behavior determines prices and quantities in specific markets.
While macroeconomics is a broad field of study, there are two areas of research that are emblematic of the discipline: the attempt to understand the causes and consequences of short-run fluctuations in national income (the business cycle), and the attempt to understand the determinants of long-run economic growth (increases in national income).
Macroeconomic models and their forecasts are used by both governments and large corporations to assist in the development and evaluation of economic policy and business strategy.