Economic Adviser Assignment: Macropoland - Special Academic Support

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Economic Adviser Assignment: Macropoland

The countrys economic growth ensures the wellness of its citizens and indicates a high standard of living. The inflation and unemployment rates are two main factors contributing to economic development. Their proportions determine the rise and decline of the countrys economy. The crucial elements in understanding these propositions are aggregate demand and supply. The countries with the economic decline often have the broken proportions of the mentioned above factors.

Analyzing the economic history and the current situation of the Macropoland, I would like to emphasize that the weak point of the countrys economic policy is the absence of aggregate demand and supply balance. Moreover, earlier, the country experienced a process of stagflation when the inflation rate and unemployment are practically on the same level (Bildirici, 2019). In the 1970s, the oil prices rose unexpectedly, so many oil importer countries fall victim to this process.

According to the provided information, Macropoland natural gas and oil importers, which means that this country also experienced this process. The current situation shows that due to the low inflation rate, the unemployment rate has increased, which, according to the Phillip curve, has an inverse ratio effect (Bildirici, 2019). Thus, the main points to provide economic growth are to lower the rate of unemployment and enhance the inflation level.

According to the data, the Macropoland is experiencing an aggregate demand decrease because the inflation is slight when the unemployment rate is 9 %. The most logical solution that I, as an economic advisor, can offer to the Macropoland is to develop the export. It would be reasonable to reduce prices in the internal market in order to avoid stagflation. A decline in prices for domestic goods will lead to an excess of exports over imports, which will be beneficial for the volume of the aggregate demand. Export, as well as investments, increases aggregate demand and encourages the external trade level. Moreover, it will also help stimulate the unemployment rate decrease because there will be a demand for labor to meet the need of the developing export.

Reference

Bildirici, M., & Sonustun, F. (2019). Chaotic structure of oil prices, inflation and unemployment. Nonlinear Dynamics Psychol Life Sci., 23(3), 377-394.

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