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Unformatted text preview: 3. T he Aggregate Demand Relation
28 The aggregate demand relation, as stated in chapter adding the time indices becomes chapter 7, adding the time indices becomes:
⎛ Mt ⎞ AD Relation Yt = Y ⎜ Relatio , Gt , Tt ⎟ ⎝ Pt ⎠ Let’s focus on the relation between the real money stock and output. We ignore changes in output caused by other than ignore changes in output caused by other than changes in the real money stock, and the AD Mt relation becomes: Yt = γ Pt ...
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- Fall '08