But since expanding aggregate demand is precisely the goal of the interest rate cut, that incentive is not a bug but a feature!
In its recent update on the world economy the IMF said that interest rates can and should stay low "for the foreseeable future" to mitigate the effects on aggregate demand of tighter fiscal policy.
Such payments provide crucial support to the long-term jobless and help to prop up aggregate demand.
If they prove correct, developing countries will make a substantial contribution to aggregate demand in the struggling rich countries and ensure the world economy's steady growth.
Consumption demand is not only a vital part of aggregate demand but also an important factor, which impact on expected rate of return and investment demand.
Arguing that we are going to spend more money to solve this problem is acting like we are in an aggregate demand problem when we are in a very long-term growth problem.
If the government increases public spending by spending more on infrastructure development, social sector spending it will increase the aggregate demand.
The development of productive force will bring about a tendency of diminishing aggregate social value, giving rise to stagnation of aggregate demand and falling of the rate of profit.
If there is debate about the details, it is remarkable how unanimous economists now are that fiscal policy needs to be used actively to boost aggregate demand.
He argument about the aggregate demand side is academic, in the negative sense of the word.
The essence of aggregate demand is greater than the total social supply.
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