Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/203898 
Year of Publication: 
2004
Series/Report no.: 
wiiw Working Paper No. 33
Publisher: 
The Vienna Institute for International Economic Studies (wiiw), Vienna
Abstract: 
The very basis of macroeconomics is the circular flow of expenditures and incomes. From this follows the conclusion that it is demand which determines supply and not vice versa. The most paradoxical result of this approach is the hypothesis that investment finances itself by quantity adjustment, if capacity and labour are not fully employed (a typical feature of a capitalist economy) or by price adjustment, i.e. by demand-pull inflation (if capacity and labour force are underemployed).
Subjects: 
consumer goods surplus
income and capacity effect of investment
quantity versus price adjustment
two-sector model
JEL: 
E1
E2
P5
Document Type: 
Working Paper

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