The response of aggregate demand to income,money supply,and price level |
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Authors: | Yew-Kwang Ng |
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Affiliation: | Monash University Australia, Australia |
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Abstract: | The response elasticities of (nominal) aggregate demand to the price level and to other nominal variables (e.g., money supply) are both positive but smaller than one. Aggregate demand is less/as responsive to real income than/as to the price level in the short/long run. Real aggregate demand is less/as responsive to real income than/as nominal aggregate demand is to the price level in the short/long run. Some uses of these results are indicated. |
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