Changes in aggregate demand (AD) can have a big impact on jobs in an economy.
When AD goes up, it means that people and businesses are spending more money. This leads to a higher demand for goods and services. Here’s how that works:
More Production: When demand increases, businesses start making more products. To do this, they need to hire more workers.
New Jobs: As companies grow, they create new jobs. For example, if a restaurant has more customers, it might hire extra staff to help serve them.
Less Unemployment: With more people working, the unemployment rate goes down. This means families have more money to spend, which can increase AD even more.
But if AD decreases, businesses might produce less. This can lead to layoffs, which means more people are out of work.
The link between AD and employment is very important for a healthy economy!
Changes in aggregate demand (AD) can have a big impact on jobs in an economy.
When AD goes up, it means that people and businesses are spending more money. This leads to a higher demand for goods and services. Here’s how that works:
More Production: When demand increases, businesses start making more products. To do this, they need to hire more workers.
New Jobs: As companies grow, they create new jobs. For example, if a restaurant has more customers, it might hire extra staff to help serve them.
Less Unemployment: With more people working, the unemployment rate goes down. This means families have more money to spend, which can increase AD even more.
But if AD decreases, businesses might produce less. This can lead to layoffs, which means more people are out of work.
The link between AD and employment is very important for a healthy economy!