短期經濟波動
 

大多數測量出某些類型的收入或生產的宏觀經濟變量波動近在一起，導致了他們的波動。如果宏觀經濟變量波動起來，他們的波動與變異數將變化。舉例來說，如果經濟越來越差，他們會減少房屋，庫存及需求消費量。

接下來，其他關鍵事實的經濟波動，作為輸出下降，失業率會上升。例如，如果企業被扣除生產更多的商品和服務，他們最終將裁減工人，切斷他們的消費數量。因此，失業率將上升。從下面的圖中顯示了一個國家的失業率。
 

失業率的統計圖
 

該圖顯示1994年到2012年美國國家的失業率。如圖你可以看到，失業率將永遠不會接近零，徘徊在它的平均自然增長率水平。

對于經濟波動的基本模型，經濟學家通常適用于總需求（AD），也總供給（AS）模型以及長期運行過程中很容易解釋短期經濟波動的經濟。

 

Short Run Economic Fluctuations Economics Essay

 

Second, most macroeconomic quantities, they fluctuate together because most of the macroeconomic variables that measure out some type of earning or production fluctuate near together. If the macroeconomic variables fluctuate together, they fluctuate with variant quantity. For example, if the economy is getting worse, they will reduce the amount of spending in houses, inventories and their demands.

 

Next, the other key-fact about the Economic Fluctuation is, as the output drops, the unemployment rate will rise. For example, if the firms are deducting their production on producing more goods and services to producing smaller quantity of goods and services, they will eventually lay off their workers to cut off their spending. Therefore, the unemployment rate will rise. The below graph shows the unemployment rate of a country.

 

Figure Graph of an Unemployment Rate

 

The graph shows the Unemployment Rate of the country US between 1994 until 2012. As you can see, the unemployment rate will never be near to zero and it also fluctuates around its average natural rate.

 

For the Basic Model of Economic Fluctuations, the Economists usually apply the model of Aggregate Demand (AD) and also Aggregate Supply (AS) to easily explain the Short-Run Economic Fluctuations in the economic along the long-run course. Next, the Economists also apply the model of Aggregate Demand (AD) and Aggregate Supply (AS) to do the analyzation of Economic Fluctuation. As you can see at the graph below, the X-Axis is the economy’s total output of overall goods and services. As at the Y-Axis, it is the level of price level.

 

Figure - Aggregate Supply and Aggregate Demand Graph

 

As the result of this graph, the intersection point between the Aggregate Demand Curve, Short-run Aggregate Supply Curve and also the Long-Run Aggregate Demand (LRAD) Curve will give out the equilibrium output and also the equilibrium price level.

 

Aggregate Demand (AD) Curve

 

The Aggregate Demand Curve will show the demanded quantity of goods and services that the firms or the government want to buy at any price level. Based on the below graph (Figure 3), the economy’s overall price level drop (from P1 to P2) which eventually will cause the increase of the quantity demanded goods and services (from Y1 to Y2).

 

Figure - Aggregate Demand (AD) Curve

 

Next, the Aggregate Demand Curve will slopes downward because of the formula Gross Domestic Product (GDP) which is Y is equal to Consumption (C) + Investment (I) + Government Purchases (G) + Net Exports (NX).

 

The Aggregate Demand Curve usually rises when the price level go down. It is mainly because of these three effects which is the Wealth Effect, Interest-Rate Effect and also the Exchange-Rate Effect. Wealth Effect is the changes in value of assets and the increase in the market value of assets. For the Interest-Rate Effect, the interest rates will fall and will stimulate the demand of the investments goods and services. Interest rates are mainly used for the cost of borrowing money and the changes in this cost will show the effect on the aggregate demand curve. Furthermore, for the Exchange-Rate Effect, the currency will be under value and it will encourage the demand of net exports.

 

Aggregate Supply Curve

 

There are two types of Aggregate Supply Curve. One of it is the Long-Run Aggregate Supply curve. The curve is vertical because the changes of price level will not affect the long-run cause of the real Gross Domestic Products(GDP). Moreover, another example of Aggregate Supply Curve is the Short-Run Aggregate Supply Curve(SRAS). Short-Run Aggregate Supply Curve will slope upwards because of several theories.

 

Figure - Short-Run Aggregate Demand Curve

 

The first theory is the Sticky-Wage Theory. Sticky-Wage Theory is because of the price level that increase and it will cause the firms or the government to hire fewer workers and lesser employments. This will definitely reduce the amount of goods and services production which may lead to lower Real GDP or output. The next theory is the Sticky-Price Theory. The Sticky-Price Theory is the price of some goods and also services that need to be adjusted in response of the changes happened in the economic situation. In addition, the other theory is the Misperception Theory. It is changes in overall price level and it will lead astray the suppliers or the sellers in selling their output and this will cause the suppliers to deduct the quantity of goods and services.#p#分頁標題#e#

 

Two Causes of Short-Run Economic Fluctuation

 

Shifts in Aggregate Demand (AD)

 

Firstly, the changes in Aggregate Demand (AD) such as the increase of it or the decrease of it will make the Aggregate Demand (AD) Curve to shift. The increase of spending of the four categories which is the business, household, government and also the foreign will eventually make the Aggregate Demand (AD) Curve to shift to the right. But when the spending of the four categories decrease, it will make the Aggregate Demand (AD) Curve to shift left.

 

Figure - Graph of Shifts in Aggregate Demand (AD) Curve

 

However, there are several factors that can cause the Aggregate Demand (AD) Curve to be shift to the right or to the left. First is the Exchange Rate of a country. For example if the country’s exchange rate is high or has increased, the Net Exports (Export minus the Import) will decrease. This also means that the Aggregate Demand Curve will also decrease. Other than that, if a country’s is having a recession, it will also decrease the country’s Net Exports which will make the Aggregate Demand (AD) Curve to shift to the left side. Unfortunately, when it heals back from the recession, therefore the Aggregate Demand (AD) Curve will shift back to the right side. Other than that, the exchange rate of a country can also be one of the factors of it. As the simple example, a country increases the value of their country’s currency in the foreign exchange market. This will make the country’s goods and services to be more expensive than the others. Therefore the Net Exports will be depressed and will move the Aggregate Demand (AD) Curve.

 

Next is the Investments, where the people or firms will invest more if the money supply goes up, this will shift the Aggregate Demand (AD) Curve to the right. Next is when the people will invest lesser or cut their investments because of the decrease of money supply which will shift the Aggregate Demand (AD) Curve to the left.

 

In addition, it is the shifting of the consumption that always changes. It is mainly because of the citizens that realize to be more saving for the future purposes and finally they will reduce their consumption. Therefore the Aggregate Demand (AD) Curve will move to the left. Different from the other one, if the people real wages increased or gain profits, they will consume more and will increase the amount of goods and services demanded, therefore the Aggregate Demand (AD) Curve will move to the right.

 

Shifts in Short-Run Aggregate Supply (SRAS)

 

Figure - Graph of Shifts in Short-Run Aggregate Supply (SRAS) Curve

 

There are also several factors that can cause the Short-Run Aggregate Supply or mostly known as ‘SRAS’ to shift. First is about the changes in unit labor cost which can cause the curve to shift to the right because of the natural rate of unemployment. The curve will shift to the left due to the decrease in amount of labor because of the firms paying higher wages.#p#分頁標題#e#

 

Next is the change of price of raw materials or natural resources that is mostly need for production such as oil, iron, aluminum and rubber. The price of the imported goods, for example is the tariff that is applied to imports or also the quota of imports things that has increased will raise the supply available. This is due to the exchange rate of a country with the foreign country, it can cause price of the imported goods such as the raw materials to be fluctuated.

 

Without exception, shift because of modern technology where the knowledge of latest technologies and with the advance technologies achieved by the country will make things produced with cheaper price. Therefore it will move the curve to the right. But if the country is lack of modern technology due to the rules and regulations of the country or any other reason, the Short-Run Aggregate Supply Curve can shift to the left because it will cost them higher price to produce goods and services.

 

Task 2

 

The recession can be seen in Spain during the 2008 and 2009. Recession means the economic growth drop two consecutive quarters. As the aggregate short run demand goes to the left it will produce recession. GDP in Spain began to fall in 2008 to 2009, this make six consecutive quarters GDP rate drop. The Growth Domestic Product has a relationship with the government debt and Spain government debt was below the European Union average. In 2007 Spain debt compare with Euro zone average is the lowest of all time.

 

Property Market

 

The Spanish Property Market collapse causes recession. The house prices fell to 11.2% in the prices of used homes was down 13.7% and also the mortgages biggest drop down 25%. The reading is the worst countrywide of all time. The Spanish property prices are similar as United State after the 2008 financial crisis. This problem was supported by the government and banks. Private sectors example companies taking the loans out cause interest rate decreases. Interest rate goes down, the prices also go down so that people borrow more money to buy housing and that’s help the investment to grow up.

 

Trade

 

The recession also cause by Spain weak trade because the increases reliance on imported petrol. Trade means a lot to Spain because half of the Gross Domestic Product is from trade. Spain trade had tripled the time from 2002 to 2008. Spain major trade is from the country example Germany, France, Portugal and Italy. In 2009 Spain has trade deficit according to the central intelligence agency. Spain faces problem in competitive price disadvantage so less competitive hard to export product to other country. Spain export and import partners are from the European Zone region. Spain export normally is vehicles and medicines. During 2009, imports values are at $293.2 billion which drop the value $415.5 from 2008. The gap between Spain’s export and import are big the main reason is lack of resources in the country.#p#分頁標題#e#

 

Inflation Rate

 

The inflation rate falls in 2009. Inflation fall means economy got problem because Spain unemployment rate will rise and this cannot be solved faster. On the hand, reduce of currency can help to recover competitiveness and export help to solve the crisis. This is the only chance that Spain can get off recession, European scared the inflation to drop that affect the fuels. Deflation causes the drugs fell 0.7 percent and also decline in clothing and prices for electronics. According to the National Statistics Institute, year to year the rate fell 0.9 percentage in December, the fifth consecutive monthly drop.

 

Recession in a country are caused by economic fluctuation. Recession have cause a lot of impacts on the citizens’ daily life and of course the economy. Recession impact a country in a social sense, financially and economically. In this case, the recession that happened in Spain led to these three

 

impacts.

 

Firstly the financial effects of recession in Spain. Spain had problems in  property section especially the real estate. There was 200% rise in in real estate prices from 1996 to 2007. In 2004, 509,293 new properties were built in Spain and in 2005 the number of new properties built was 528,754. Of all the houses built, over 28% were vacant in late 2008.Spain became one of the worst affected countries compare to other country when the speculative bubble was revealed. Eurostat revealed that Spain was the European country with the sharpest plunge in construction rates over the June 2007-2008 period.

 

Spanish house prices drop greatly at the first three months of 2012, data has found. This will aggravate the country’s already severe problems with the housing market. National Statistics Institute INE reported in its House Price Index that property values dropped by 12.6% as compared to 2011.

 

In some coastal resorts, there are 70% reduction in house prices in the last 5 years as the people’s struggle to sell their properties . So many people trying to sell  properties but ended up letting go for a fraction of what they were first offered .

 

Spain have billions of euros of debts relating to the property sector and also an extremely high unemployment rates. Banks will borrow $100 billion euro for Spanish Government to resolve the issue. However, banks’ uncertainty led to mortgage deals for new seeker for a new property drop fast. Mortgage lending suffered the largest fall in over six years in early 2012 reports have stated. A further 20% in house prices decline could still occur according to the International Monetary Fund (IMF).]1

 

During the crisis period, Spain had a public debt of 36.2% of GDP. This was mostly down to the amplifying tax revenue from the housing bubble. This caused the government to increase their spending without debt accumulation.#p#分頁標題#e#

 

Spain is edging towards a financial disaster and causes currency to tear apart as the Eurozone was back.  Spain’s huge economy was said to be at a ‘tipping point’ and would eventually require international aid.

 

Spain need a loan from the International Monetary Fund as a result of this crisis. Having already  the requirement for an emergency loan package from bank up to ￡80 billion Spain, this country is further hurt by enduring property crash and having an insane percentage of unemployment rate. Currently, Spain is paying debt for over six months. Sources said Spain would need a loan to prevent financial collapse.

 

Secondly, recession that happened in Spain caused economic problems most notably the severe unemployment problems in Spain. In October 2008, Spain saw its unemployment rates similar to 1996 levels. Spain had its unemployment rate climbing 37% from October 2007 to October 2008. At the end of March 2009, Spain’s unemployment rate hit 17.4%with the total of the jobless doubled over the past 12 months, when two million people lost their jobs. Spain had the same number of jobless as France and Italy combined by July 2009.

 

Spain depend on the inter-generational family structure for a significant portion of the social safety net. The unemployment rate is 12.4% less than the 25% overall rate.  During the boom period, the underground economy can be found in employment which is estimated to be as large as 20% of the economy.

 

Spain would  miss budget targets agreed to with other eurozone countries. There was, however, one perversely positive element to the report, the labor picture is so bleak that it could help Prime Minister Mariano Rajoy make the case that Germany and other lenders cannot risk imposing further austerity measures on Spain’s economy in return for providing more European rescue funding.

 

Spain would receive up to 100 billion euros, or $130 billion, of banking aid that eurozone finance ministers pledged in June. Arguments over how to spend the money underscores the extent to which Spain is losing the sovereignty argument Mr. Rajoy has long employed.

 

Mr. Rajoy was forced at a recent summit meeting of European Union leaders in Brussels to accept that Spain receive funding but have conditions and need the approval of Germany, where Chancellor Angela Merkel is supported by additional eurozone to increases vary bailout program ahead of next year’s elections.

 

Spain’s banking crisis came to the fore in early May, when Madrid nationalized one of the country’s largest lenders, Bankia, and then requested the banking bailout a month later. Bankia reported a loss of 2.6 billion euros for the third quarter.

 

Challenges Madrid that how to value assets that Bankia and other troubled banks are set to transfer, which is meant to sequester tens of billions of euros of property loans and repossessed assets that carry the risk of never being repaid or sold. In setting up the bad bank, Madrid must perform a balancing act, one that proved Ireland’s undoing earlier in the European HYPERLINK "http://topics.nytimes.com/top/reference/timestopics/subjects/e/european_sovereign_debt_crisis/index.html?inline=nyt-classifier"debt crisis. The challenge is to make such assets cheap enough to attract private investors without forcing the entire banking sector to make steep and immediate reductions in the value of their whole property portfolios.#p#分頁標題#e#

 

While the latest jobs report makes for grim reading, Spain is showing resilience in some crucial sectors of its economy. Exports have risen, as they did in neighboring Portugal, which has swung to a trade surplus.

 

Tourism make one-tenth of Spain’s economy, has also remained relatively buoyant, with Spain welcoming a record number of foreign visitors.

 

A sigh of relieve in spain as Ford shut three factories in Europe, eliminating 5,700 jobs,. The decision is to protects Ford’s factory in Valencia, which will take over production from Gen. Overcome the unemployment problem  like lowering the minimum wage or cutting unemployment benefits.

 

Lastly, the effect of recession towards the citizens in Spain . Recession effects socially can be seen clearly as whenever a country is in trouble, it will be the citizens who will suffer. When the economy is in trouble, inflation will occur and that will cause price increases that effect of the food consumption.

 

Spain's economic has been the one of the worst in Europe. Collapse of the housing industry and unemployment figures rising from the lowest  to currently the highest in Europe, consumers would spend less. increase price of raw materials felt by most other European countries and the rise of private label has been almost inevitable, as consumers look to buy cheaper products. Private label now stands at around 38 per cent penetration. This makes it the highest percentage share in any European country, with most products coming in food and commodity categories like water.

 

IRI's consumer survey found, similarly, that 30 per cent of Spanish consumers bought cheaper product because of the recession, while 17 per cent purchased cheaper soups. On the other hand, there was good news for premium products in Spain. People have been spending more time at home, to save money. Consumer would spent a lot more on a national brand in this category. The rationale for this is that sticking with a premium brand ensures quality and still means significant money savings on the price of going out to a bar.

 

Manufacturers  focusing their marketing efforts on these premium products

 

and when the recession ends, these brands will be able to bounce back to register previous levels of consumption. CPG firms in Spain have also resorted over the recession to discounts in order to improve and protect market share.

 

Spain, the fourth-largest economy in the Eurozone, is treading water. Europe is poised to approve a loan of up to €100 billion to save its stricken banking sector, and with Spain's borrowing costs remaining dangerously high, fears are growing that it could follow Greece, Ireland and Portugal in a full-scale bailout. The prospects for growth are low as Spaniards steel themselves for the effects of €27 billion worth of cuts this year as the country struggles to bring its budget deficit down from 8.9 per cent of GDP in 2011.#p#分頁標題#e#

 

Spain is forecast to be the only country among the 17 nations of the Eurozone to remain in recession in 2013. Unemployment, already at 24.3 per cent, is expected to worsen. Half of all Spaniards aged between 18 and 25 are out of work – youth unemployment in Spain now exceeds 50 per cent, matching that of Greece. Blocked out of a labour market that favours older employees on permanent contracts who are expensive to fire, youth workers in Spain have suffered the brunt of the economic crisis.

 

Once, many unskilled youths found work in the construction sector, but with growth crippled and Spain sliding into its second recession within three years the competition for jobs is high.

 

Where their parents looked to a bright future, as Spain developed from a fledgling democracy on the death of the Fascist dictator Francisco Franco to one of the success stories of the European Union, today's youth have little to do with their time but join marches and sit-ins against the austerity cuts, the political system and rising unemployment.

 

Middle classes people  have university degrees, mortgages; they used to drive new cars to their jobs. The profile of those we help has changed radically since the crisis began,' José Chai Jurado, the president of the Tres Cantos Red Cross branch, who also runs his own online marketing company, said. 'This is one of the richest towns of Madrid. People here are well-off, there is a high standard of education and a high standard of living. Where we used to help the real down-and-outs, now we see normal middle-class Spaniards, people who never ever thought they would reach such lows.'

 

They can survive on unemployment benefits, the next year they can live off their savings. But by the end of the third year, there's nothing left and they still have the high mortgages on properties that they can never hope to sell for the price they bought at. And the family support has been so stretched, it just isn't there any more. With a population of 42,000 and an average age of 41, Tres Cantos boasts a 60 per cent graduate rate among its workers and a level of unemployment less than half the national average. But while official levels show less than 11 per cent unemployment, the number of Tres Cantinos who have lost their jobs has soared 20 per cent in two years, compared with 4.3 per cent across Spain.

 

To the north of the town a vast expanse of land serves as an example of Spain's boom-and-bust construction sector, a dark cycle that has left Spain's banking sector on its knees with its exposure to toxic property investments. It is an eerie scene with roads complete with roundabouts, street lamps and even saplings lining the bicycle routes that were meant to serve a new construction phase of 7,000 properties that would swell the town by a further 25,000 inhabitants. But, as everywhere across Spain, construction has all but ceased, and plans to complete the new residential blocks have been put on hold since the property market bottomed out in 2007. Closer to town, for sale signs are plastered across apartment shutters, and estate agents windows are full of unsold properties.#p#分頁標題#e#

 

Hardship among the traditional middle classes will have a disastrous trickle-down effect, he predicted. 'Spain is going back to how life was in the 1970s in the uncertain years following the fall of the dictatorship. It was hard and it's going to be harder still. Everyone is in denial, especially the politicians.' He warned that even towns such as Tres Cantos, whose accounts are relatively healthy compared with many across Spain, will see a breakdown in services as funds dry up. 'Now the streets are cleaned and rubbish collected every day, but come September, we'll be lucky if rubbish is collected twice a week,' he said. 'A lot more municipal workers are going to be laid off.'

 

The government prime minister Mariano Rajoy  has an estimated debt of €40 million and  asked for a bridging loan of €7 million from the central government, one of 2,619 councils in Spain to have applied to the government in Madrid for help to meet repayments.

 

Martinez added that people and councils have been spending above their means for too long. The problem during the decade-long building boom from the mid-1990s people were encouraged to take mortgages often of up to 110 per cent.Investment on property and the prices went increase.Place in Tres Cantos, people are mortgaged to the hilt. Lifestyle haven’t change much.With both spouses working things are fine, but it only takes one to lose their job and there's a family in trouble.'

 

Education cuts have caused a wave of public protests as the government shaved €10 billion off education this year alone. Protest by teachers over plans to extend their working hours and increase classroom sizes by 20 per cent. May saw the first ever strike coordinated by the nation's five main teachers' unions, from nursery school to university. Those teachers qualified as functionarios  have seen their pay cut by five per cent, other teachers, such as Vega, employed on short-term contracts, have seen their positions cut entirely.]5

 

Spaniards are generally very pessimistic about their futures as a result of recession according to a survey carried out by the Pfizer Foundation. This really affect their daily lives and well being.

 

The survey, based on interviews with 1,200 Spanish citizens carried out in October this year, found that almost half of those questioned feared losing their jobs next year (44.3%) while 75% of those questioned who are self employed or run a business fear that the employment market will deteriorate. Furthermore, 86.2% of those questioned who are unemployed believe that it will be difficult for them to find a new job.

 

7th Social Debate Forum was presented the finds of the survey. Experts who attended the meeting agreed that the Spanish population was frightened and feared for the economic future of the country. However, fear of the recession demonstrated by the survey could lead to feelings of hopelessness which could then result in social discontentment which would make the problem infinitely worse.#p#分頁標題#e#

 

People questioned for the survey 28% said that their standard of living had gone down, income had drop or their health had deteriorated while 44% of those questioned suffered more stress and tension because of recession. They had been changing their habits or give something up such as leisure activities or holidays.

 

Nevertheless, people always concern of their employment situation (26.3%) followed by health, the employment situation of a relative and the recession in general. According to the survey, it can be seen many people were worried about social services and although people questioned believed that health care is good or very good 70.1% were worried about it being damaged both in the short and long term.In addtion, the medical attention they have received this year was no different to other years.

 

The survey found that 69.9% of the population were worried about the affects of the recession on public education and 73.2% felt the same about social benefits and pensions – 73.7% were worried about the effects of the recession on subsidies and unemployment benefits.

 

Eating habits are concerned 74.6% believe that they have not been affected while 32.2% said that they had been forced to shop differently as a result of the recession. The personal  hygiene and taking care of physical appearance 41.9% said it  had been affected due to economic reasons while 26.4% said that it had been affected due to the lack of time.Age of retirement people is not going to postpone but increase the pension fund to working mothers contributions into the pension fund .The idea of having to pay a contribution to health care or to pay a small amount on a monthly basis for public education were rejected by most people in the survey.

 

Task 4

 

There are 2 method can overcome the recession in Spain Monetary Policy and Fiscal Policy. Monetary Policy defined as a country control the money supply and target to the interest rate to stabilize the economic growth. As Fiscal Policy can be defined as government receive tax and government purchase that can affect the economy.

 

To resolve recession in monetary policy, one way to higher up the aggregate demand. The money supply increases, the interest rate decreases and affect the investment to grow so the aggregate demand increases. Example, the low interest rate in Spain sold the yield on the bond came in at 2.835% from 3.07%.The investment grows from the property while Spain base rate Euro is low and mortgage rate of 5%.