Write a DQ response to the following. 100 words or less. No surces required
The selected article from the Wall Street Journal is titled “Novo Nordisk’s Wegovy Weight-Loss Drug Gets Approval in China” (Chopping, 2024). Based on Section 23-3b, Table 1, the approval of Wegovy in China primarily relates to “Shifts Arising from Changes in Consumption.” This factor best explains the potential shift in aggregate demand, as this new weight loss drug is likely to stimulate consumer spending in healthcare (Mankiw, 2023). The large overweight population in China suggests significant potential for increased consumption.
In today’s economy, several aggregate demand factors are at work. Consumer spending has been volatile due to inflation concerns and the pandemic shock. Government expenditure remains high due to stimulus measures and infrastructure investments (Costa Junior et al., 2021). Exports have also been affected by global supply chain disruptions due to political unrest and diplomatic strife for example in Ukraine and Russia. These factors contribute to shifts in aggregate demand.
These aggregate demand factors have implications for prices and output quantity. Increased consumer spending and government expenditure can drive up prices leading to inflation pressures. This is evident in recent inflation data showing rising costs across various sectors. However, supply chain issues may impede output quantity creating a mismatch between demand and supply. However, we may see an increase in output quantity over time to moderate price pressures as businesses invest in productivity improvements and supply chains stabilize.
