Principles of Macroeconomics / Unit 8 MAC 0705 short lesson, about 20 seconds
Why Micro Reasoning Does Not Transfer
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The idea
A single good's demand curve slopes down because buyers substitute toward it and because a lower price leaves them better off. Neither reason survives in the aggregate.
In practice
When every price falls together there is nothing to substitute toward.
Where people slip
And incomes fall with prices, so real income does not change. The three effects of the last entry are the only reasons that remain.
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