Chapter 27

Applications of Aggregate Supply and Demand

The aim of this chapter is to illustrate the concepts of Aggregate Supply and Demand and to put them to work by using them to examine several issues of economic policy, some of which have been considered in the context of simpler models already. We will find that the more complex and realistic model does make a difference, even in simpler issues, and we will take up an issue that the simpler models could not have dealt with at all: the proposal for a "supply side" tax cut.

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Contents

  1. Chapter Introduction
  2. Monetary Policy: An Increase in Aggregate Demand
  3. Paradox of Saving: A Decrease in Aggregate Demand
  4. Changing Aggregate Supply
  5. The Supply Side
  6. Chapter Summary
Next Chapter: Controversies in
Macroeconomics 1: Monetarism and the Policy Ineffectiveness Proposition

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