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INDUCED CHANGE: A change in aggregate expenditures, especially consumption expenditures, that is "induced" or triggered by a change in national income or gross domestic product. Induced changes form the foundation for the multiplier effect, which is set in motion by autonomous changes in aggregate expenditures. In terms of Keynesian economics and the Keynesian cross diagram, induced changes are seen as a movement along in the aggregate expenditures line. This two step process, autonomous changes causing induced changes, is key to explaining business cycle fluctuations.
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INFLATIONARY EXPECTATIONS, AGGREGATE DEMAND DETERMINANT One of several specific aggregate demand determinants assumed constant when the aggregate demand curve is constructed, and that shifts the aggregate demand curve when it changes. An increase in the inflationary expectations causes an increase (rightward shift) of the aggregate curve. A decrease in the inflationary expectations causes a decrease (leftward shift) of the aggregate curve. Other notable aggregate demand determinants include interest rates, federal deficit, and the money supply.
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Post WWI induced hyperinflation in German in the early 1900s raised prices by 726 million times from 1918 to 1923.
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"Aerodynamically, the bumblebee shouldn't be able to fly, but the bumblebee doesn't know it so it goes on flying anyway. " -- Mary Kay Ash, entrepreneur
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CJE
Canadian Journal of Economics
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