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# Tag Info

## Hot answers tagged aggregate-demand

6 votes
Accepted

### 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"? It contradicts law of demand as a general ...
• 56.7k
6 votes

### GDP doesn't add up in FED data - why?

It is because you are using wrong data, in fact the two series you plot never overlap save for some crossing points, and given you are using wrong datasets its actually weird why they follow each ...
• 56.7k
5 votes
Accepted

### Trouble at differentiating a consumption function

This does not seem to have anything to do with calculus. The idea is that the income not consumed $Y_d - C$ is saved (usually denoted by $S$). This saving is then lent out to companies (via banks) who ...
• 29.2k
4 votes

### Does the Sonnenschein-Mantel-Debreu theorem fundamentally undermine Mises' Economic Calculation Argument?

First, the Sonnenschein-Mantel-Debreu theorem has nothing to do with demand functions. It is a result about excess-demand functions, which represent demand minus supply. They are formulated in the ...
• 13.3k
3 votes

### Savings "identically" equal to investment?

This is indeed a strange explanation. I can only speculate, but my guess is that your teacher reasons as follows: (i) The IS curve, as the name says, is the set of points in $(Y,r)$-space where $I=S$. ...
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2 votes
Accepted

### Concept of Utility in demand systems

The utility function taken for estimating demand systems depends on several parameters: The nature of theoretical models and definitions of the variables used in these models are quite different from ...
• 308
2 votes
Accepted

### The new Keynesian IS curve: What determines output?

The solution to your question is price stickiness, or as the author calls it staggered pricing. Let's assume a typical question in the Basic New Kenesian DSGE Model: What happens when a technological ...
• 520
2 votes

### Savings "identically" equal to investment?

Yes total saving is by definition always equal to investment. This, is definitional because we define savings in macroeconomics as $S=Y-C$. If you work with $Y=C+I$ then its easy to see that $Y-C=S=I$....
• 56.7k
2 votes

### why does consumption not have a positive multiplier?

I think either you misunderstood your tutor or they were not clear. What they likely meant was that increase in total $C$ wonâ€™t be multiplied by multiplier. I think this is best seen mathematically. I ...
• 56.7k
1 vote
Accepted

### Why does a positive output gap shift the short run AS curve instead the demand curve?

My question: Why is it that in the initial starting point of positive output gap it is the AS curve that adjust. Just looking at the picture couldn't it be that the demand curve shifts to the left/...
• 56.7k
1 vote
Accepted

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

The $x$ axis actually shows real (gross) output not GDP per se. Real GDP is an estimate of real output. Only if you assume no measurement error and if you assume away gray economy and black economy ...
• 56.7k
1 vote

### How to derive the FIRST equation from the SECOND one?

I recommend multiplying first eq by the only nominator in eq, then performing additions and subtractions. These operations are reversible.
• 29.2k
1 vote

### Price rigidity and demand-constrained economies

Given a rigid price, $P$, and a static money supply, $M$, real money balances $M/P$ cannot adjust. As a result, people have less real money than they would require to purchase their full-employment ...
1 vote

### New Keynesian IS curve: question about time dependence

As you already mentioned this equation can be derived from the households consumption rule. the equation is derived based on consumption C rather than income Y, by considering the marginal utility of ...
• 520

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