According to an article I read on Seeking Alpha, the earthquake and tsunamis that recently hit Japan are thought to bring great devastation to the country and its aggregate demand. The natural disasters have left Japan in need, with the citizens depending on the government to provide further fiscal and financial support. The article states that people will “debate about how they might do that given that you can only build so many highways and bridges” (paragraph 10). This article also reminds us of how rebuilding infrastructure is a no-brainer in this century, but with Japan’s aging population, government spending is going to have to lessen from personal health care in order to rebuild Japan. However, this might be difficult to do because of the high demand for health care.
Aggregate demand is defined as the total demand for final goods and services in the economy at a given time and price level. Throughout this article, i discovered that Japan is experiencing a lot of negative things in term of its total aggregate demand. Distribution of income is a factor that is affecting and resulting from Japan's aggregate demand. The earthquake and tsunamis are going to rapidly affect all income earners; high, medium, and low. Therefore, people will be using their savings towards recovering, while people also lose their jobs. This is going to have a very negative impact on the aggregate demand and the total level of consumption in Japan is going to decrease. Disposable income is another factor of aggregate demand that is involved in the decrease of aggregate demand. People are going to spend a larger sum of their income on necessities and taxes, which will decrease all disposable income levels in Japan's economy.
In my opinion, I think that Japan's government should step up and provide financial and fiscal support for all the citizens in need. What has happened is unfortunate and since people are losing so much, including jobs, the government is what they are all depending on. As well, i think that the government also needs aid in order to bring up its aggregate demand. All the other countries in the world should step up and lend a hand because we also depend on Japan for some of our imported goods.
I agree with your point that Japan is going through a lot of negative impact and its overall aggregate demand is going down. However, I think you could mention more about the different components of aggregate demand. For example, maybe you can talk about how aggregate demand is decreasing because consumers are spending less. But at the same time, aggregate demand could also increase because governments are now spending more to recover from their losses. You could also mention that Japan's demand for imports has increased, since they could no longer produce what they need and have to rely on materials from foreign countries.
ReplyDeleteOverall, it'd be good if you mention more points in your connections.
After the disastors in Japan, I also feel as though the agreggate demand in their country will go down. With no money to spend and everyone in a frenzy, the economy will not be the biggest worry. Perhaps when everyone is safe and they start building their infastructure again will agreggate demand improve. This will probably be the case because Japan will start recovering soon and then their economy will be booming once again do to all the jobs available.
ReplyDeleteI agree with you when you say that other countries should step up and help Japan recover from this tragedy. Japan is use to have one of the world's strongest economy. However, with all the damage the natural disasters have caused, they have trouble keeping their economy intact. Afterall, when other major economies crash, they affect many countries like the Great Depression in the US. This effect could trickle down to us.
ReplyDeleteI also think that you should elaborate on the factors of aggregate demand and explain their reasons. Since most of the infrastructure is broken down, most families will lose jobs and lose income causing and total decrease in demand for consumer purchases. The projects to rebuild Japan by the government should be lead to an increase in GDP because of increase demand for government spending. However, the lack of consumer spending overpowers it. You could also have incorporated how Japan will need more imports causing a drain in the economy and make less exports due to the "radiation." This whole disaster seems to have brought a decrease in GDP.
Overall, I think that you wrote a very revelant blog on an important event even though it was depressing.
Elena Jiang Su D2P1
The disasters that have occurred in Japan are truly devastating. I definitely agree with you because the other countries should try to help Japan recover. I don't think that aggregate demand is the big issue in Japan at the moment. They will definitely improve their economy and such after they save peoples lives. Once Japan has settled down a bit, the building of their infrastructure and exports will without a doubt go up creating a higher aggregate demand.
ReplyDelete