Thursday, February 5, 2009

For the non business types – Keynesian Theory relies on something called aggregate demand (or better yet artificial aggregate demand) it is the demand for the gross domestic product (GDP) of a country, and is represented by this formula: Aggregate Demand (AD) = C + I + G (X-M) C = Consumers' expenditures on goods and services. I = Investment spending by companies on capital goods. G = Government expenditures on publicly provided goods and services. X = Exports of goods and services. M = Imports of goods.
Problem – it’s an ASSUMPTION that monies redistributed will keep demand at equilibrium.


Post a Comment