Premium
AGGREGATE EFFECTIVE DEMAND AND SUPPLY CURVES
Author(s) -
DIEFFENBACH BRUCE C.
Publication year - 1977
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/j.1465-7295.1977.tb00466.x
Subject(s) - economics , aggregate supply , aggregate demand , supply and demand , shadow price , microeconomics , demand curve , investment (military) , shadow (psychology) , aggregate behavior , excess supply , effective demand , monetary economics , macroeconomics , econometrics , monetary policy , mathematical optimization , psychology , mathematics , politics , political science , law , psychotherapist
This paper provides a systematic and precise microeconomic basis for aggregate effective demand and supply curves. A shadow price framework permits an orderly treatment of effective demand and supply. The shadow price is the monetary amount which one would pay for the right to buy or sell one extra unit of the good at the market price. The analysis supports Keynes's approach to interest rate and investment demand theory.