In these videos, we cover following issues:
- Why is AD curve downward sloping
- What are the factors affecting the shift of AD curve Continue reading
2 Aggregate Demand Curve concepts
Reply
Tag Archives: Aggregate demand
3 Tax Multiplier Concepts
In our earlier videos, we have seen, first, very generally, how any change in autonomous demand shifts aggregate demand, then , secondly, we saw specifically, how a change in government spending affects aggregate demand and how do you calculate government expenditure multiplier and now, we will look into the effects of a change in lumpsum tax and its affect on aggregate demand.
More specifically, we will cover following three issues in this series
- How does the reduction in lump sum tax affects aggregate demand?
- How do you calculate taxation multiplier?
- Numerical example to calculate taxation multiplier Continue reading
3 Aggregate demand and Multiplier fundas
What is Aggregate demand? Aggregate demand is the sum total of demand by all sectors in an economy, namely, consumers, firms, government, foreigners. In these videos, we explain, how do depict aggregate demand graphically, where does the equilibrium in an economy lies? What is an autonomous part of aggregate demand?
If an economy is given a shock, in terms of either increase in government spending or an increase in autonomous investment or fall in taxes or an increase in money supply, then how does aggregate demand curve shifts?
Lastly, we discuss, why total increase in income is more than the initial shock (in terms of above discussed factors). This is explained by Multiplier process. What is multiplier? How is it derived? Hoe is the process of multiplier is depicted on a diagram? Continue reading
