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The question is wrong - the assumption is that the quantity of money has decreased, while purchases ("Aggregate demand") are the same. If fact its exactly the o
by dimitar 14y ago
The question is wrong - the assumption is that the quantity of money has decreased, while purchases ("Aggregate demand") are the same. If fact its exactly the other way around.
Anyone who misses this fact is very unlikely to give a correct explanation. And the explanation is in an Econ 101 course.
- jvm 14y agoI agree with you technically speaking, but another way of thinking about it is that cashflow is really what we think of when we think "quantity of money" (Adam Smith, a gold piece that sits in a chest is realy not part of the money supply, yaddayadda). Cashflow (aka NGDP) is actually way down: http://marketmonetarist.com/2012/06/19/guest-post-measuring-the-stance-of-monetary-policy-through-ngdp-and-prices-by-integral/ http://marketmonetarist.com/2012/06/19/guest-post-measuring-... ...it looks like this is the distinction you're making when you say Aggregate demand, I'm really just adding this comment to help other people better understand your comment.