The macroeconomic principles defined in Economics 103 relate to NAFTA's impact on aggregate supply and demand, employment, investment, and their effects on national income. ... As tariffs were lowered, U.S. goods became cheaper and more competitive in Mexican and Canadian markets, and at this lower price level the quantity demanded of U.S. goods increased. On the attached graph, as the price level drops from A to B, the quantity demanded increases from C to D; it becomes less expensive for U.S. firms to supply goods to Canada and Mexico as the supply curve shifts from AS to AS'. In o...

• Word Count: 3714
• Approx Pages: 15
• Grade Level: Undergraduate

For example, in the long run, price stability complements efforts to achieve maximum output and employment; but in the short run, some tension can arise between efforts to reduce inflation and efforts to maximize employment and output. ... Demand for Reserves The demand for reserves has two components: required reserves and excess reserves. ... Changes in the federal funds rate reflect the basic supply and demand conditions in the market for reserves. Equilibrium exists in the reserves market when the demand for required and excess reserves equals the supply of borrowed plus non-borrowed reser...

• Word Count: 4049
• Approx Pages: 16
• Grade Level: Undergraduate