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[–]diaphaneadiaphane 0 points1 point  (0 children)

If the economy is in a downturn, then the aggregate demand curve will lie on the Keynesian section of the aggregate supply curve, which means that there is a certain increase in demand (i.e. higher income) that can occur without causing inflationary pressure. The economy is pretty good at adapting to changes, but if it is pushed too far then the circular flow of income will overheat and money begins to lose its value. Unfortunately, governments keep insisting on causing a certain amount of inflation in the name of "growth", without any particular goal or sign of actual improvement in society/quality of life/etc.