Aggregate Supply

Since the Ancient times man has been indulging in some or the other economic activity. People carried out these activities to earn a decent living. In the past the merchants traded with foreign lands in various goods like silk and spices. They were extremely wealthy. It is said that there was a booming trade between the Indians and the Arabs. Many wealthy Arab traders came and settled in the western part of India. Time passed and gradually we saw the birth of giant kingdoms. The trade got a boost in medieval period and there was a thriving trade route between the central Asia to china via India and it was called the Great Silk Route. The modern nation States have carried out the concept to a different level. The health of a nation state is calculated in terms of GDP which is also called gross domestic production. This terminology is used to denote the sum total of the economic activities carried out in a country. br/>
The Aggregate Supply is the amount of goods and services a country offers to meet the growing demand of a people at a particular point of time. The modern economy is a curious mish mash of demand and supply. The rise of global trade has created pockets of huge supply and places of insatiable demand. So there was a natural movement of the goods from one place to another. With modern ships constructed people were able to transfer goods from one place to another through ships and also easily. The maritime security helped to eradicate piracy which was quite prevalent in the middle ages. The Aggregate Supply of a country must match its demand or else there would be the problem of overstocking and the prices might go southward. The countries might face the problem of oversupply because probably the demand decreased. It can be for a variety of reasons. Sometimes if the economy is export oriented and its currency has become strong then the cost of its goods would become high and as a result the client countries might not buy it. This can lead to a huge loss of business because then the companies would need to dispose of the inventory at a discounted price and probably incur loss. br/>
Supply chain management system is an important cog in the wheel of the modern day business and it helps the people to understand the environment in which we are conducting trade and financial activities. The rise in globalization and the overdependence of some countries on fuel has lead to a very high price of fuel and so the demand fell because the prices of essential commodities became high and people were forced to curb on their spending spree. As a result recession struck in 2009 and the markets went in turmoil. So we need to carefully assess the balance in the demand and supply and not allow the speculators to dictate terms in the global economy as it is happening now. Apart from that the governments should also inject periodical stimulus to the financial system of the country to boost economic activity.