Response to Assignment Two
This article talks about a DSGE model to elucidate aggregate labor bazaar shift in supply and demand curve. The model comprises capital adjustment charges, habit development predilections, and new shocks. According to the article, habit formation might shift the aggregate labor supply curve at the time of news shock. When demand surpasses supply, prices seem to increase. There is a converse connection between the prices and supply of goods and services when demand is not changed (Zhao et al., 2020). On the other hand, when demand upsurges and supply remain constant, the higher demand outcomes to a greater symmetry price and vice versa. Capital adjustment price assists amplify the change of the aggregate labor supply curve.
The article talks about the universal demand for food rising and the solemn inquiries about whether supply can rise sustainability. Land-founded development is likely but could worsen biodiversity loss and climate change. The article scrutinizes the leading food manufacturing sectors in the ocean to approximate maintainable supply curves (Zhao et al., 2020). It is a basic financial belief that when supply is greater than demand for a service or good, prices fall.
The aggregate labor supply curve is changed; as a result of the affluence, impact instigated by the variation of ingesting under a news shock (Zhao et al., 2020). Furthermore, capital change charges aid increases the difference of ingesting, and therefore the shift of the aggregate labor supply curve under the news shock. In addition, the aggregate demand curve will be moved, as it functions in the typical RBC model after the comprehension of the news shock.
The link to the article is https://doi.org/10.1016/j.econmod.2019.12.018
Zhao, N., Shi, Y., Sun, Y., & Miao, J. (2020). Aggregate labor market fluctuations under news shocks. Economic Modelling.