What Is Dynamic Demand?
Refers to the relationship between inflation and changes in aggregate demand. The dynamic aggregate demand curve can be derived from the IS-LM model.
Dynamic aggregate demand curve
Right!
- Chinese name
- Dynamic aggregate demand curve
- Definition
- Between inflation and changes in aggregate demand
- Aggregate demand function
- y = y-1 + A + m-
- m-
- Reflects changes in real currency balances
- Refers to the relationship between inflation and changes in aggregate demand. The dynamic aggregate demand curve can be derived from the IS-LM model.
- Refers to the relationship between inflation and changes in aggregate demand. The dynamic aggregate demand curve can be derived from the IS-LM model. The dynamic aggregate demand function can be expressed as: y = y-1 + A + (m-), is a parameter greater than zero, and (m-) reflects the change in the actual currency balance. In a coordinate system with inflation as the ordinate and output as the abscissa, the geometric representation of this relationship is the dynamic aggregate demand curve. The curve is sloping downward, which means that there is a reverse relationship between the inflation rate and the level of aggregate demand when the relevant variables and parameters are known. On the other hand, it can be seen from the equation that the position of the dynamic aggregate demand curve depends on a variety of factors including the previous period's output level, currency growth rate, and changes in spontaneous expenditure.