Macroeconomics versus 'Common Sense'

By: Laski, Kazimierz.

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BookSeries: wiiw Working Papers: 33Publisher: Wien : Wiener Institut für Internationale Wirtschaftsvergleiche (wiiw), 2004Description: S., 30cm.Subject(s): consumer goods surplus | income and capacity effect of investment | quantity versus price adjustment | two-sector modelCountries covered: non specificwiiw Research Areas: Macroeconomic Analysis and PolicyClassification: E1 | E2 | P5 Online resources: Click here to access online Summary: The very basis of macroeconomics is the circular flow of expenditures and incomes. From this follows the conclusion that it is demand which determines supply and not vice versa. The most paradoxical result of this approach is the hypothesis that investment finances itself: by quantity adjustment, if capacity and labour are not fully employed (a typical feature of a capitalist economy) or by price adjustment, i.e. by demand-pull inflation (if capacity and labour force are underemployed).

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Item type	Current library	Call number	Status	Date due	Barcode
Paper	WIIW Library	5.700/33 (Browse shelf(Opens below))	Available		1000010000532

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The very basis of macroeconomics is the circular flow of expenditures and incomes. From this follows the conclusion that it is demand which determines supply and not vice versa. The most paradoxical result of this approach is the hypothesis that investment finances itself: by quantity adjustment, if capacity and labour are not fully employed (a typical feature of a capitalist economy) or by price adjustment, i.e. by demand-pull inflation (if capacity and labour force are underemployed).

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