Think about the last purchase you made. How did the money you spent on this good or service cause the Multiplier Effect to kick in? Explain in detail how this chain of cause-effect has led to an increase in income and spending for the economy as a whole.
Say you are the manager of a store selling refrigerators (or any other good you may choose).
Aggregate Demand exceeds Aggregate Supply
The demand and therefore the sale of your refrigerators increase unexpectedly. As you experience an increase in sales of your goods, everyone else in the economy is experiencing the same increase in demand for goods and services. Business inventories are being depleted. What are some possible reasons why there is this increase in AD? Explain in detail what this disparity between aggregate demand and aggregate supply would cause.