The models of supply and demand on the market

Размещено на http://www.allbest.ru/

Introduction

The degree of activity of the national economy is constantly varied. Volumes of production of goods and services increased due to the growth of labor productivity, the increase of the capital, as well as new technological advances. However, occasionally there are situations when companies are unable to realize the produced goods and services and reduce the volume of production. As a result, real GDP and other measures of income are reduced. What are the causes of short-term fluctuations in economic activity? Does the State have the ability to prevent the periods of falling incomes and increasing unemployment and affect their performance? Most economists are used in the analysis of short-term fluctuations in the model of aggregate demand and aggregate supply.

1. Aggregate demand

Aggregate demand - is the term "aggregate" in macroeconomics quite often. We are talking about the gross national product, the total capital, the labor force, paying attention to the fact that this concept is manifested not just the sum of goods, capital, etc., and they are interrelated, systemic unity. This unity should be seen in aggregate demand. Under the aggregate demand means a series of final goods, for which a demand in the markets of the country in a given period of time under these conditions. In other words, the aggregate demand is the aggregate demand for final products in the relevant markets of the country. From the definition it is clear that aggregate demand is similar in content to the GNP. The value of both for a given level of prices can be expressed in terms of the cost of customers. Already known Fisher formula:

MV = PQ,

Where,

M - money supply of the country,

V - velocity of circulation of money,

P - the average level of prices of goods,

Q - the mass of commodities, located in markets across the country allows the product to identify MV aggregate demand, and in the second product PQ - the gross national product.

However, between the GNP and aggregate demand, there are differences. Firstly, we know that the value of GNP is determined for the year, while aggregate demand can be determined at this time (today), week, month, that is, for a certain period. Second, GDP is the sum actually produced goods, including services, while demand, although includes real products that consumers can buy, but which may not be available. Third, there are differences in the subjects. GNP, as we have noted, is made by companies of the country. The subjects of other aggregate demand. Here they are.

The population of the country, makes the demand for consumer goods (C);

Company makes the demand for investment goods (I) ;

The state carries out various purchases, which include all federal and local spending on the army and weapons, free health care and education, public investment programs, construction of housing and roads and so on. D. (G);

Net exports - the difference between exports and imports of the country Xn.

Thus, the aggregate demand (AD) can be expressed by the formula, the formula resembles the GNP:

AD = C + I + G + e.

Only the last element of aggregate demand e is not net exports and total exports. Moreover, the amount of C + I + G in the formula in aggregate demand may not coincide with a similar sum in GNP, as demand from the public, companies and the state may be partly met by imports. However, if such a balance imports with exports, in this case e will express net exports [5]. Aggregate demand can be represented as a curve AD, where the vertical axis is delayed price level (P), and the x-axis - not the nominal and the real product, ie expressed in base year prices.

The aggregate demand curve reflects the change in the aggregate level of spending, the government, business and other countries, depending on changes in price levels. AD curve reflects the same relationship as that of the given formula - as prices increase (P) decreases the value of the real issue volume, which makes the demand (Y), ie, the law of decreasing demand. In other words, the rise in the price level leads to a reduction in all components that make up the real aggregate demand - consumption, investment, government spending and net exports.

The aggregate demand curve is similar to a market demand curve, but between them there are not unimportant differences. So, if the market demand curve for the product we are building on the assumption that a fixed price for other products and services, and consumer income is unchanged, the aggregate demand curve reflects possible changes in the general price level, which in turn can lead to a change in real output (Y ).

A content analysis of aggregate demand allows you to emphasize its key factors that can be divided into price and non-price. Let us consider them in order.

1.1 Price factors of aggregate demand

In explaining the decreasing character of the curve AD indicates the three most important reasons for this:

It only affects the interest rate;

It only affects the real wealth;

Action effect of import purchases.

The effect of the interest rate. The higher the interest rate, the lower, other things being equal, the amount of aggregate demand, was demonstrated in the real volume of the issue, including due to the fact that increasing the price of credit and declining real income. Thus, for a fixed amount of money supply growth in the demand for money increases their price - the interest rate. Higher interest rates reduce the volume of purchases on monies borrowed, ie, declining real incomes and aggregate demand. Accordingly, the lower interest rates encourage borrowing, both the population and enterprises, leading to increased costs for consumer and investment goods. This effect is sometimes called the name Dzh.M.Keynsa, since he analyzed the impact of changes in interest rates.

1.2 Non-price factors of aggregate demand

Offset curve AD, can be caused by a variety of factors influencing the change in household spending, business and government.

1.2.1 Consumer spending

- Consumer welfare. Wealth is composed of all assets held by consumers, be it equities, bonds, real estate. The sharp decrease in the real value of the assets of consumers leads to an increase in their savings (to reduce the purchases of goods), as a means to restore their well-being. As a result, reductions in consumer spending, aggregate demand decreases and the curve shifts to the left. It is worth recalling here that the change in the real value of tangible assets is not affected by changes in the price level.

- Customer expectations. Changes in patterns of consumer spending are dependent on projections which make the consumers, for example, when one considers that in the future their real income increase. Then they are ready to spend the majority of their current income, and therefore at this time consumer spending increase, the aggregate demand curve shifts to the right. The situation is the opposite, if consumers believe that their future earnings to decrease.

- Consumer debt. A high level of consumer debt, formed as a result of previous purchases on credit, can make him cut current spending to repay existing debts. The demand curve shift to the left again.

- Taxes also play an important role in consumer spending. Reducing income tax rates entails an increase in net income and the number of purchases at a given price level.

1.2.2 Investment costs

- Interest rates. Other things being equal, an increase in interest rates caused by any factor other than changes in price levels, will lead to a reduction in investment spending and a reduction in aggregate demand.

- The expected return on investment. More optimistic forecasts for the return on invested capital increased demand for investment goods, thereby shifting the aggregate demand curve to the right.

- Taxes on businesses. Their increase will lead to a decrease in profits, and, consequently, to a decrease in investment spending and aggregate demand.

- An increase in excess capacity that is unused cash capital restrains the demand for new capital goods and thus reduces aggregate demand. Simply put, companies are not operating at full capacity; there is little incentive to build new factories. Conversely, if firms find that their excess capacity decrease, they are ready to build new factories and buy more equipment. Therefore, increased investment spending and aggregate demand curve shifts to the right.

1.2.3 Public expenditure

Increased public procurement national product at a given price level will lead to an increase in aggregate demand as long as the tax charges and interest rates will remain unchanged. Conversely, a reduction in government spending will lead to a reduction in aggregate demand.

1.2.4 Expenditure on net exports

Speaking of arms, shifting the aggregate demand, we are referring to changes in net exports. Its increase shifts the demand curve to the right, decrease - to the left. The logic of this statement is as follows: reducing imports implies an increase in domestic demand for domestically produced goods.

- The national income of other countries. The increase in the national income of other countries increases the demand for products of our country and therefore increases aggregate demand. This is because when the level of income increases abroad; their citizens are able to buy more goods, both domestic and foreign production. Consequently, the export of our country is increasing along with the level of the national income of our trading partners.

- Exchange rates. The change rate of the ruble against other currencies is the second factor that affects the net exports and, consequently, on the aggregate demand. Suppose that the price of the yen in rubles increased. As a result of the new balance of Japanese consumers will be able to get more rubles for a certain amount of yen for them Russian goods become cheaper Japanese. Meanwhile, Russia will be able to buy fewer Japanese goods. In such circumstances, we can expect that our exports will increase and imports decline. Therefore, to increase net exports, followed by the total demand

At the same comprehensive income on aggregate demand affects what portion of income is spent, what is saved, because it is the willingness to spend the available funds determines demand. Of particular importance is the marginal propensity to save. This factor deserves special attention because it involves the multiplier effect of aggregate demand.

Marginal propensity to save (MPS) describes the proportion of income growth (Y), going on savings, and meaning growth of savings (KS):

If, for example, the income of economic entities increased by 100 units., Of which 75 units. was spent, and 25 units. preserved, the marginal propensity to save (MPS) will be 1/4. When this propensity to save, aggregate demand as a result of revenue growth by 100. increase by 400 units. in accordance with the multiplier equal to 4.

The aggregate demand multiplier (M) is determined by the relationship of unity, which is taken for the entire increase in income to the share-saving part of this revenue - 1/4:

The multiplier effect is manifested because of the increase in revenue intended for consumption (75 units.), Spending some parties (buyers), is converted into income of others (sellers), which, in turn, based on the same propensity to save received divided by the sum of savings and costs. Recent are those of other sellers, and are also divided into savings and expenses, etc. to the last currency. The sum total expenditure of 400, causing a corresponding increase in aggregate demand. In turn, the amount of savings will eventually be equal to the initial increase in income.

With this comes the restoration of the growth of income equality between aggregate demand and aggregate supply.

Multiplier effect occurs when a change in consumer spending, government procurement, investment, net exports, acting in the direction of increasing aggregate demand, and towards the reduction and thereby increasing fluctuations in aggregate demand and the economy. In this regard, for example, we can talk about the action of the tax multiplier is manifested through the impact of taxes on income and expenditures of economic agents.

Here, the tax appears as a form of forced savings. In addition, the propensity to save may be supplemented by propensity to import, determined by the proportion of income allocated to the purchase of imported goods. It is obvious that a high proportion of reducing aggregate demand for domestic goods.

The share of income gains, intended for the purchase of imported goods, characterizes the marginal propensity to import. At the marginal propensity to save, reflective and tax exemptions, it is a complex multiplier. If, for example, with 1/4 of the tax revenue is reserved for imports and is 1/4 of the increase of the same income, a complex multiplier is 2:

At the conclusion of our analysis of the non-price factors, the demand will add that their effect is illustrated graphically by shifting the aggregate demand curve to the right or left of its initial position.

2. Aggregate supply

Under the aggregate supply means a series of final goods offered on the markets of the country in a given period of time under these conditions. Since the aggregate supply represents the volume of actual production, in this time period for its size it can be equal to the GNP, if exports compensated imports and net exports reduced to zero. The source of the proposal is to ensure the total social production, but in the short and medium-term production can be supplemented inventory. Moreover, the production of goods, providing an offer in a given country can be carried out outside the country. It is imported as one of the sources of aggregate supply [5].

In microeconomics, the supply curve S has a positive slope, indicating that at higher prices manufacturers will expand production of this product. In macroeconomics aggregate supply curve has a slightly different shape. The fact that the economy-wide can arise three different states: underemployment: approaching full employment; full employment. On the AS curve, there are three grounds:

a) Horizontal, or Keynesian;

b) Upward or intermediate;

c) Vertical or classic

2.1 The three segments aggregate supply curve

Keynesian AS curve segment is horizontal at a certain price level. This suggests that firms are willing to provide any demanded volume of production at a given price level. The meaning of such behavior of firms is the following: they can hire the required number of inputs for the additional issue at the prevailing prices of these factors. This is possible with incomplete use of factors of production in the economy when unemployment. The classic period of the AS curve is vertical. This means that the same amount of goods would be offered, regardless of the price level. The desire to produce more and hence employ more factors of production for the company's growth is the cost of this additional employment. When the economy there is full employment of resources, an additional increase in the cost of employment do not provide the growth issue, but they require a refund of the price of the goods - the price increases.

2.2 Non-price factors of aggregate supply

2.2.1 Changes in prices for resources

- Availability of internal resources. By increasing the cash domestic resource production possibilities curve shifts to the right of society that entails the displacement of the aggregate supply curve to the right, too. Increasing the supply of domestic resources lowers their prices, resulting in reduced costs per unit of output. Consequently, at any level of prices all firms will produce and launch on the market a greater volume of real national product than ever before.

- Prices of imported resources. Import resources reduce costs and therefore reduce the cost per unit of real volume of national production in our country. From this we can conclude the following: reduction of prices of imported resources will increase our aggregate supply and increase - decrease. The weakening or strengthening of dominance in the market or market monopoly, which have resource providers can also affect the prices of resources and aggregate supply. The growing influence of trade unions may cause an increase in wages and, consequently, an increase in costs per unit of production, thereby shifting the aggregate demand unit to the left.

2.2.2 Changing the rules of law

- Taxes and subsidies. The increase in the first leads to higher costs and lower aggregate supply and subsidies to business, ie direct government payments to the company reduce production costs and increase aggregate supply.

- State regulation also increases the cost of production per unit of output, shifting aggregate supply curve to the left.

3. Microeconomic equilibrium model AD - AS

In the most general form of equilibrium in the economy - it is balanced and in proportion to the basic parameters, in other words, a situation where economic actors have no incentive to change the status quo. With regard to market equilibrium - the correspondence between the production of goods and demand for them. Usually the balance is achieved by either reducing the need (in the market, they always appear in the form of effective demand), or by increasing and optimizing the use of resources.

It should be noted that the classical and Keynesian models characterize the economy in different time slots. The classical approach allows us to analyze the economy in the long period in which the nominal prices of resources and commodities, as relatively "flexible" time to adjust to each other. For a short period covered in the Keynesian model, characterized by relative rigidity of nominal prices. However, major differences in the interpretation of the AS curve in the classical and Keynesian schools reflect the differences in the response to the basic question of balance analysis at the macro level - what level of employment, the use of productive capacity corresponding to the equilibrium volume of production, in the extent to which the conditions of macroeconomic equilibrium in the society uses the available resources. Consider the two models in more details:

3.1 Classic model

The classical economists proceeded from the fact that the market system in the long run makes full use of resources in the economy. Moreover, the occasional imbalances are overcome by automatic self-regulation of the market. Thanks to him, in the end, the economy is always achieved production volume corresponding to full employment (Y = Y *). AS curve in the classical model is vertical and is fixed at the potential volume of production. Changes in aggregate demand does not affect real output and employment, and has the effect of price changes only. The classic idea of ??a market economy, reflected in the writings of Adam Smith, David Ricardo, T.Maltusa, JS Mill and later developed in the works L.Valrasa, A. Marshall, A.Pigu and others. These economists proceeded from the fact that the prices of final goods and factors of production are sufficiently flexible in order to bring into line the aggregate demand and aggregate supply, even in the short term.

3.2 Keynesian model

Based on fairly slender classical theory can successfully analyze the economic situation and the need to justify government policy until the crisis 30s of the twentieth century. However, long-term depression and mass unemployment in those years it was difficult to explain on the basis of the classical theory. The logical explanation of the situation gave an alternative, we have already mentioned, the Keynesian approach. His supporters have expressed doubts about the ability of a competitive mechanism automatically adjust the system to an equilibrium state corresponding to full employment. Classics believes that prices are mobile and flexible. The Keynesian model assumes that prices and wages vary only slightly, especially in the short term. Indeed, in the first decades of the twentieth century, the presence of monopolies and unions, the legislation on minimum wages and other factors led to the fact that prices and wages are no longer mobile. Keynesian concept is rejected and the position of the classical theory, according to which the offer creates its own demand. Keynes argued that there is an inverse causal relationship - aggregate demand creates the offer. If aggregate demand is insufficient, and the volume of production will not be equal to the potential (full employment). When price stickiness economy for a long time had to be in a state of depression with high unemployment.

The model illustrates the position of the Keynesian concept that the volume of supply, or real output, which will support businesses, driven by demand, therefore, it can be argued that the decline in aggregate demand will lead to a reduction in real output (from Y1 to Y2). In this situation, the aggregate demand and aggregate supply will be balanced (AD = AS), but at a level that is far from the potential volume (Y *> Y1> Y2), ie underemployed resources. And this situation may persist for a long time. And by itself it will not change the situation. To avoid big losses, long-term unemployment can be through active macroeconomic policy of the state, to stimulate aggregate demand.

4. Automobile transport

Incentives for market

TRENDS

In the Soviet and then Russian history, the domestic auto industry has always been and remains one of the priority sectors of the economy of the state. The financial crisis - the latest proof. Major automakers have received as a direct state support in the form of loans on highly concessional terms, and indirectly in the form of guaranteed procurement of vehicles, increasing customs duties on imported foreign equipment, sale of a significant number of models subsidized credit rates. As in such "difficult" working conditions in the Russian car industry crisis year of 2009, what to expect in the coming 2010, and, most importantly, which, according to experts, medium and long term is the domestic automotive industry? This was discussed at the 18th International Automotive Conference organized by JSC "ASM-Holding" in December 2009.

Thus, analysts say: the situation is beginning to stabilize, albeit at a slow pace.

Although the market declined significantly in quantity and value terms, sales in 2009 are starting to stabilize (if stabilization can be considered a drop of 40-50% compared to pre-crisis period). In the coming months, a rapid recovery is not expected in the first place because stocks (sell at a discount) are close to depletion, unemployment remains high, consumer confidence - low and banks are still reluctant to give loans.

Foreign cars manufactured in Russia are sold better than other categories. Big discounts designed to reduce excess inventory, was an important, but short-term stimulus to the market - they have caused significant price competition and kept sales from falling further (Chart 1).

supply demand market crisis

Black - primary market

White - secondary market;

The average cost of a car in US dollars decreased by 16%, and in rubles - increased by 13%. Compared to 2008, in the first 10 months of 2009, imports of foreign cars in quantifiable decreased by 70.5%, due, primarily, increased customs duties on imported cars and depreciation of the ruble.

The decline in the Russian automotive market for the first 10 months of 2009 was significantly higher than in major European markets.

Symmetrical response to the crisis was the fall in domestic production. Due to overstocking and falling demand for products automakers were forced to significantly reduce production volumes. Thus, in the first quarter of 2009, a decline of 63% compared to the same period in 2008, in the second quarter - 58%, in the third - 66%. The decrease in the first nine months of 2009 reached 62.4%. In the first nine months, production of traditional Russian brands fell by 67.4%, cars - by 55.1%.

The most important thing for us - it is the status of the Russian-made car. Prior to 2009, despite the arrival in Russia of significant amounts of foreign automakers, the proportion of cars produced in Russia, total sales declined both in value and quantity terms.

The share of Russian-made cars in total sales

However, in 2009 the increase in tariff rates, the devaluation of the ruble, preferential loans for cars produced in Russia, reduction of customs duties on imports of components for assembly plants in Russia have significantly increased the share of cars assembled in Russia in total sales. That's why it makes sense to dealers pay more attention to brands and models produced in Russia, as they have a competitive advantage and successfully sold.

State of the Russian market of automotive components is as follows. In 2008, the growth of the Russian market of automotive components amounted to about 20%, while the total market has reached 46.5 billion dollars. The factors of growth of the steel market growth of the automotive market in general, and the change of its structure, ie. E. An increase in the use of cars, which required more expensive components and spare parts.

In 2009, according to preliminary estimates, the market for automotive components will be reduced by a quarter. Due to the slowdown in new car sales primary market will suffer the most and will decrease by around 70%.

FORECASTS

According to experts, the activities of the automotive industry in 2010 is quite predictable and is cautiously optimistic in view of the actual level of performance in the crisis year of 2009. A legitimate question: what's next - in the medium and long term? Preparation of the program of development of the automotive industry up to 2020 was engaged in a joint working group Minekonomrazvi-ment and the Industry and Trade Ministry of Russia. Here are the most interesting, in our opinion, excerpts from this document.

Let us consider a few points that characterize the actual state of affairs in the Russian automobile industry.

The situation is ambiguous: on the one hand, this rapid market growth, due to rising purchasing power of the population and strengthening of the ruble, and the other - a permanent reduction in the market share of domestic producers while increasing competition in the same price segment. Russia 2004 "de facto" opened its borders to foreign automakers, attracting investments in the framework of the "industrial assembly" (the so-called Decree number 166). The purpose of the production of foreign companies in Russia has been achieved - almost all global giants present in one way or another with their industrial projects in Russia. That is why the current family "promsborschikov" can be attributed to the Russian producers, separating them from domestic manufacturers that rely on Russian brands.

The available range of the domestic auto industry is weakly presented, due to insufficient investment in development. The fact that Russian companies in general have invested in the car industry in 4-5 times less than their foreign competitors, that does not allow our companies to talk about any serious, and it is immediately reflected in the sales results. In 2008, the prosperous segment of passenger cars the share of domestic companies in terms of quantity dropped to 22.6%, and in value terms took a little more than 11% of the market.

The next point - the lack of modern component industry. With the arrival of new foreign car component industry has not yet formed. The main reason - unattractive small volumes of production capacities for new foreign productions - less than 25 thous. Cars a year. Indeed, localization of how a responsible units cannot be economically viable at such low volumes. On the other hand, the Russian component industry is fragmented and consists of "fragments" of automobile factories, which bore the main site machinery. According to various estimates, no more than 5% of Russian enterprises belonging to the component, comply with the requirements of ISO-16949 and other standards of quality and organization of production.

The next point - the social factor. In any scenario completely avoid layoffs in the automotive industry would be impossible, since Russia lags behind in productivity from the market leaders in at least 2-3 times.

It came from this working group, the purpose of formulating a development of the automotive industry, namely the maximization of the value added created in Russia, for all conversions of production, with an increase in the proportion from the current level of about 21% to 48% in 2020. The target macroeconomic parameters avtoproma- 2020 meant share industry GDP 2.38%, the amount employed directly in the automotive industry - at least 400 thousand people. Park of cars will increase to 52 million units, and the saturation of the park in the 1000 population by 2020 will reach 363 cars, subject to the disposal of old cars at 6% per year.

And perhaps the most important thing, is the development of own high-grade automotive industry is impossible without the presence of its own R & D base and patent databases on key elements, components and industrial solutions.

The total forecast of the automotive industry until 2020 is made up of forecasts in some segments - passenger cars, light commercial vehicles, trucks and buses, where there are their trends and their scenarios. The format of each segment is determined based on the share and the volume of imports in 2020, domestic production, calculated based on the share and the volume of exports, domestic production allocation between the various categories of producers, as well as depending on the number of foreign players.

Размещено на Allbest.ru