define it – 11 seconds hint: prices go up, people …
causes the downward sloping of the AD curve. as Prices go up people compensate by SAVING more
intertemporal subsitution
getterdone Wrote: ------------------------------------------------------- > intertemporal subsitution thats the term I was looking for haha
If I remember right doesn’t it have something to do with people working less because they have more disposable income to take vacations and do what they want to do?
prices go up, people save more b/c 1) rates go up 2) people feel poorer
rlange, i think that is if wages go up…
amberpower Wrote: ------------------------------------------------------- > rlange, i think that is if wages go up… You are right, I just looked it up. “If the price level rises, real wealth decreases. People try to restore their wealth by saving”. Thanks for clearing that up…