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Showing posts with the label aggregate demand

True, Aggregates Can Conceal...

as many Austrians are fond of noting. A focus on global average temperature may conceal the cold winter in Scotland, say. But they can also reveal: For someone who refuses to think in terms of global temperature, global warming is inconceivable. Similarly, for someone who refuses to think in terms of aggregate demand, an aggregate demand shortfall is inconceivable.

Aggregate Supply and Aggregate Demand

Sometimes we see people who view themselves as "pro-Say's Law" arguing that "Keynesians are wrong about growth being demand driver: supply has to come before demand." This is odd, to me, because, while I think it is questionable whether Say's Law always holds (unless one states it as a tautology, in which case, it will always "hold," but trivially so), it certainly is based on a genuine insight: people supply commodities on the market in order to demand others: supply IS demand, just seen from a different perspective. But once one gets that, then it is clear that neither supply nor demand can come first, since they are simply different views of a single action: offering something in exchange for something else. So, why even separate them in macroeconomic analysis? I am mulling this over, but my current suspicion is that problems may arise with one or another aspect of this single action. For instance, if taxes on income over $10,00 were raise...