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China faces some serious economic problems. One main problem is that China seems to be suffering from excess capacity resulting from an overinvestment in factories, retail stores or infrastructure which leads to an imbalanced supply and aggregate demand relation. Aggregate demand is the total demand for a nation's goods and services from domestic households, firms, the government and foreigners. The article reveals two different approaches to evaluating China's economy: the Keynesian theory and the Austrian school theory. The Keynesians argue that aggregate demand drives stability and that governments can and should help in difficult times. The Chinese government has the tools to increase aggregate demand as it could for example "adjust interest rates and bank reserve requirements, instruct state-owned banks to maintain lending", deploy foreign exchange reserves, or initiate construction and infrastructure projects. On the other hand, the Austrian school of economics believes that it is hard for the government to invest money wisely, particularly in China, where there seems to be an environment of "economic favoritism". The Keynesians may believe that China will be able to manage its overcapacity; however, the Austrian theory argues that the Chinese government will distort resource allocation and further limit aggregate demand. - Julieta Fischer

At the moment globally there has been a spike in food prices. One of the causes has been the severe droughts in the United states which have driven up the food prices. In response to this inflation the government of Brazil decided to reduce taxes on basic household goods to support an economic recovery. This action also leads to stabler prices, which is one of the macro-economic goals of a country. The tax break on household goods allows for a increase in consumption as consumers will feel wealthier and have an increase in purchasing power. As a result this will increase Brazil's GDP to a certain extent as Consumption is one of the factors that influence the gross national product. 

Based on the article it can be deduced that budget deficit plan in Germany is quite successful. Overall Germany has been able to accumulate a surplus of 8.3 billion Euros through tax revenues and social security funding in only 6 months. The surplus was quite unexpected because in 2011 their was a deficit in Germany. However, this surplus also suggests that the revised tax plan and fiscal policy in Germany are quite successful and that the nation is working towards fully reaching the 4 major economic goals, in particularly that of economic growth. However, the article also suggests that this surplus could decrease by the end of 2012, in which case the fiscal policy may not be as successful after all. To fully examine this budget deficit in Germany data from the whole year of 2012 is needed. However, as of now the article suggests that the policy implemented is quite a successful one.  

Luxembourg's Prime Minister Jean-Claude Junker is defending the newly released budget bill, in place for 2013. The bill set in place plans to invest more money into the consolidation package, in place to consolidate Luxembourg's budget. A 1.8% increase in government spending, in relation to the budget set in 2012, is put forth to remove any divergence from the country's stability and growth. Juncker stressed that although the recent financial crisis which has caused a recession in Luxembourg over the past 4 years, the bill will insure that Luxembourg's deficit will be lower in 2013 than 2009. Juncker says that in 2013, Luxembourg's deficit will be at 4.3%.  Juncker says the reason Luxembourg has come into deficit is the investment of 200 million Euros into Luxembourg's employment fund. Furthermore, the increase of unemployment isn't beneficial to the countries current financial situation.  He does not plan to raise VAT, as some countries in the EU such as the Netherlands have recently done to fill part of their deficit. This would only harm economic recovery and affect the country's low-income earners.  Juncker's ultimate goal is to make Luxembourg debt free by 2014. The minister promised that the government would try their very best to achieve this goal, while still being aware that the economic development of Luxembourg remains "extremely fragile".

Currently the economic growth forecast of South Africa isn't looking as promising as thought, while  additionally its budget deficit is going to be higher than promised. 4.8 percent of GDP instead of 4.6 percent. According to the president, Gordhan, this is due to slower economic growth and not due to increase in government spending. He emphasizes that there will be no increase in government spending. From a neoclassical side this is a good thing as an increase in spending accompanied by a decrease in taxes will only further increase the governments budget deficit. The mining strikes ongoing in South Africa have had two significant consequences. 1. more people have become unemployed due to the strikes for higher wages.2. Offshore investors are worried that the government will increase spending to ease the social tensions. As a result both decreases AD as there is less consumption and investment. 

Indonesia is threatening to slow down its economic expansion because of its  lack of spending, especially on infrastructure. At this stage, Indonesia is only  spending around 2% of its gross domestic product on capital expenditure and  infrastructure which is far below the amount needed to support Indonesia's  current economic growth.

The article discusses that the US may face a fiscal cliff in order to reduce the large deficit that has accumulated in the past. A fiscal policy stands for a series of major tax increases and government spending cuts if Congress does not act. The article discusses that through lower government spending and higher taxes it is expected that $600 billion can be extracted from the economy to decrease the debt. However economists think that every dollar of deficit reduction will subtract the same or a greater amount from economic growth. In theoretical terms this would make sense. If government spending decrease this reduces aggregate demand in the economy and by that will cause a decrease in real GDP. Households will cut back on purchases and especially households that are dependent on government support through unemployment benefits will suffer from the policy. Although this will decrease the deficit of the US it may be that it distracts the fragile recovering economy. 

The National Institute of Economic and Social Research has advised the UK government to ease its fiscal policy because of the danger of the economy entering another recession. The UK fiscal policy is unintentionally causing deficient demand. Demand was already relatively low as private and public sectors were focusing on paying off their debts. This decline in demand has lead to a decrease in consumption and a fall in GDP. Also, businesses have become reluctant to invest due to the uncertainty about domestic and foreign demand. The UK government has been cautious about easing their fiscal policy because of their desire to achieve their fiscal goals, which they have been relatively successful in reaching so far, as stated by a Treasury spokesman who said: "… the government's commitment to deficit reduction has helped maintain market confidence". A way for the UK to ease their fiscal policy and subsequently increase demand would be to cut taxes, which would allow households to have a higher level of disposable income and firms would be incentivized to invest more because of the rising domestic demand.  

Britain's budget deficit has turned out to be smaller than previously thought in the first six months of the current tax year. However, recent data suggests that they will have to announce extra government spending cuts or taxes rises if it is to meet this year's deficit-cutting target. Britain's plans to eliminate the deficit by 2015 have been pushed back by two years as economic growth has been far weaker than predicted and its deficit still remains the largest of any major European country. 

This article discusses the need for the U.K. government to "show some political backbone" by becoming more enterprise friendly in order to stimulate the badly required growth of their economy. U.K. business leaders have become increasingly concerned as the CBI has predicted that the U.K. economy will shrink by 0.3% this year. This fall in GDP is a sign that the country is entering a double-dip recession. The reason behind this is declining exports, the on-going euro crisis, a stagnant economy since the coalition, reduced borrowing on credit cards, an increase in unemployment and a lack of household spending. A reduced borrowing on credit cards and lack of household spending directly affects GDP as GDP can be calculated using the expenditure method, where household consumption is one of the factors taken into consideration. If consumption falls, so does GDP. In order to prevent the GDP from falling further and to promote economic growth, schemes such as tax breaks for small firms taking on extra workers ,schemes that boost the mortgage and household market and schemes that support household expenditure have been implemented. This could lead to a rise in employment as well as expenditures, causing GDP to grow. 

Indonesia has been experiencing rapid economic growth which has increased the size of the middle class as well as their disposable incomes. The article describes how an increase in required down-payments on cars and houses may decrease the growth in Indonesia's economy. Last year the automotive finance growth of banks was 55%, the highest in the world. They have noticed that this is an unsustainable rate of growth. Due to these fears the Indonesian central bank has placed new regulations which will make buyers pay higher down-payments when making a purchase on credit. These down-payments have been increased from originally 10-20% to 30% and more. With that households see themselves with less money available for consumption. The new regulations may also result in a dip in property sales as aggregate demand decreases. However on the other side it may also only defer sales, since people will safe longer until they buy property. 

India's investors and some politicians want the Reserve Bank of India (RBI) to lower its interest rates so that more firms could invest in capital goods in the country. This would increase investment, which in turn would shift aggregate demand to the right and lead to GDP growth. RBI however argues that lowering the interest rates could cause inflation to go up, which in turn would have a great effect on India's lower class citizens. The RBI also argues that interest rates are not very high at the moment, and blame the lack of investment in 'bad governance and lack of reforms'. If the RBI lowered the interest rates and investment did not increase much as they argue, while inflation goes up, many poor people would suffer in the process as they wouldn't be able to buy as many essential goods such as food. This would cause a movement along the aggregate demand curve as price level goes up. On the other hand, from an investor's perspective this would be the best way to generate economic growth, which would benefit the country as a whole if it led to more investment on capital goods.

Investors in India are asking the Reserve Bank of India (RBI) for lower interest rates, so that more can be invested in order to accelerate the country's growth rate (which has been decelerating). However, the RBI is concerned that this could lead to an increase in inflation (which is already high) as AD would increase, causing the country to produce beyond its full level of employment, meaning that price levels would raise more than RGDP proportionally (demand pull inflation). The RBI believes that people are more concerned with inflation as it causes the price of food to go up, affecting poor families. However, there is a possibility that growth is of more importance to Indians when looking at the country's economic performance. Other factors such as an increase in oil prices and a poor-monsoon could drive food prices even higher. As result the Indian RBI must be very cautious whether it will be worth lowering interest rates.

Unemployment is Greece has reached its highest point, 23.1% from only 8% before the economic crisis two years ago. 672,000 out of 800,000 registered unemployed people are not receiving any unemployment benefits and therefore have no income at all. This means there is a huge number of people who are not able purchase goods and services so the overall consumption is decreasing. Unemployment is costing Greece about five billion per year. Minimum wages have also been cut by 23% which are increasing the costs for the government.  This had led to an $81 billion decrease in consumption and the shutting down of thousands of businesses which means the aggregate demand curve has shifted to the left, decreasing consumption in the country. The economy in Greece has shrunk by 7%, meaning it is in recession. 

This article discusses the changes which European Union officials are planning for the future in order to ensure economic growth. One of the changes mentioned are the Spanish borrowing costs which will be pushed up to their highest levels for four months. In the short-run this will mean less spending from consumers, but in the long run will ensure a significant decrease in debt. Furthermore, they have called on national governments to "implement a series of job-creating policies". These include cutting labor-related taxes, as well as shifting the burden to property, energy and emission levels. These particular changes will cause a rightward shift in aggregate demand as there is an increase in government spending. Moreover, countries will be forced to lift remaining restrictions on worker movement within the EU, which will allow for more employment. This will also cause a rightward shift in aggregate demand because there will be more employed workers and therefore amount of consumption will increase as more people will be able to spend more money.  Overall, this article shows improvements for the future which will increase aggregate demand of the EU. 

The article describes how unemployment in Argentina has dropped below 7% for the first time in a long time. The decreased unemployment is due to an increase in the country's exports and an increase in national aggregate demand. Both of these things would cause an increase in aggregate supply, which in result would increase the aggregate supply of labor, causing the unemployment rate to decrease. However, this is only seen as a short term change, as the export are expected to decrease due to the economic crisis in Europe, and the increasing movement of production to china, and the growing competition from Chinese produced goods, because of the cheaper prices. This would cause aggregate demand in Argentina to decrease, which would cause a response from the short run aggregate supply, in the form or a decrease. This would again cause the aggregate supply of labor to fall back down again, resulting in the unemployment rate rising again.

The unemployment rate in Scotland has increased to 8.2 percent within the last three months. It is now worse than the UK unemployment rate, which is at about 8.1 percent.In order to fix the problem, the government has now decided to step in, in order to achieve economic growth and get people back into work. The government wants to do this by simplifying the business environment and reform the tax system for companies in order to help them create more jobs. By decreasing the costs of production, the government wants the SRAS curve to shift to the right and therefor increase aggregate supply. If costs of producing are lower, firms will higher more workers, which will result in less unemployment according to theory. 

Ireland's high current unemployment rate of 14.9 percent is a result from its economic situation : Ireland is in a recession. The article clearly stipulates this, there is a 'recession in the real domestic economy'. The recession arose from the housing bubble : mortgages were cheap, people overborrowed and then the high housing prices fell so that people were less wealthy and no longer able to pay their mortgages. Wealth is a determinant of AD. It is the added value of all assets or stocks. If wealth or perceived wealth increases, then so will a household's consumption of goods, thereby shifting demand, as the household feels 'wealthier' or able to purchase more. The reverse is also the case, when wealth declines, demand declines, such as in Ireland. The Irish were much less willing to consume goods, as they believed they were less wealthy or had less money( which they eventually did , upon having to pay mortgages; debt), and so consumption decreased, which thus shifted aggregate demand into a demand slide recession. This is a situation where prices in a nation inflate and output decreases, due to the lesser demand. If less is being produced, less factors of production are required. Thus labor, a major factor of production is no longer required in the economy, which gives firms the incentive to lay off many of their workers. This is the unemployment Ireland is experiencing. It is interesting that the article also depicts the  'austerity drive'  that the Irish government resulted to in the recession.  As it correctly suggests, this is 'self defeating', as during a demand slide recession the Keynesian policy follows that the government should not save its funding, but rather spend. In a time of recession, the government should spend,  so as to decrease unemployment stimulate the economy. If the government spends, this will have a multiplier effect through the economy, as it provides income to households ( by spending, the government employs labor), where househo

Brazil's President Dilm Rousseff a 66 billion dollar stimulus plan to revive the country road and transport systems in order to bolster the economy. The government predicts a growth of 3% in 2012, down from the 4.5% growth in 2011. In order to maintain the GDP growth at what it was the previous year the government plans to invest 66 billion dollars into the country transport system in order to promote jobs and growth within the country. As this is not a transfer payment (tax revenue redistributed to pensioners, veteran, and the unemployed) the government is contributing to the economies gross domestic product. This stimulus plan would go to wages of the people working on the transport system and the purchase of capital goods necessary to make the improvements. In order to maintain the GDP per capita in Brazil it is necessary for the economy to grow at the same rate as the population.