Questions tagged [aggregate-demand]

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Why is the horizontal axis 'Real GDP' in Aggregate Demand Curve

In the aggregate demand curve, the horizontal axis is labelled 'Real GDP'. Why doesn't it represent 'Quantity Demanded'? After all the curve is the aggregate demand curve, so we have to show some ...
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Does the Sonnenschein-Mantel-Debreu theorem fundamentally undermine Mises' Economic Calculation Argument?

So recently I have been thinking a lot about this fundamental question: Does the Sonnenschein-Mantel-Debreu theorem disprove the "Law of Demand"? Basically, the Sonnenschein-Mantel-Debreu ...
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How to derive the FIRST equation from the SECOND one?

First equation Dynamic Aggregate Demand How the derive from second equation the first one?
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Price rigidity and demand-constrained economies

In this note, http://web.mit.edu/krugman/www/MINIMAC.html, Krugman develops a simple model to introduce the idea that whenever an economy experiences price rigidity then this economy is demand-...
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Tax Reduction effect on agreggate demand

Im trying to figure out what initial and additional effects would a 20 thousand dollar tax reduction with a 3/4 marginal propensity to consume would have on the aggregate demand. I first thought of ...
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Aggregate demand and Real GDP

I understand that aggregate demand is the demand for all goods and services in an economy. However, I later found out that aggregate demand and real GDP are calculated using the same formula, so does ...
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GDP doesn't add up in FED data - why?

To visualise the formula: $$Y=C+I+G+NX$$ I downloaded the FED data and plotted it, only to discover the two curves progressively diverge (see chart below). What am I missing? thank you! $Y$ = https://...
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Concept of Utility in demand systems

I have seen that researchers use different utility function in demand systems estimation such as Stone Geary. What is the role of these utility functions? What are utility function other than stone ...
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Trouble at differentiating a consumption function

everyone. This is kind of a basic question, but I have a weak background on calculus and I already tried to figure this out by myself for a few hours without success. So, I am finally appealing on you ...
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New Keynesian IS curve: question about time dependence

A simple version of the new-Keynesian IS cuve is given as follows: $$ \ln Y_{t} =\ln Y_{t+1} -\frac{1}{\theta} r_t. $$ Here $r_t$ is the real interest rate and $1/\theta$ is the cross elasticity of ...
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The new Keynesian IS curve: What determines output?

The New Keynesian IS curve can be described by the following (log-linearisation around the steady-state):$$y_t=E_t(y_{t+1})- \frac{1}{\theta}(i_t - E_t\pi_{t+1}-\rho)$$ where $\displaystyle\frac{1}{\...
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