00:01
So here we're talking aggregate demand.
00:02
Let's remind ourselves what aggregate demand looks like, right? it's a relationship between the price level and income that looks something like this.
00:09
So here we're talking about the wealth effect, right? and here's my explanation of the wealth effect.
00:16
And most of these answers involve prices going up, right? you see all of them start with an increase in prices.
00:24
A, b, c, d all starts off with an increase in prices.
00:27
An increase in prices makes people poor, right? makes people poor, right? because imagine, for example, ex, you have $300, the price goes up, and when the price goes up, you can afford less.
00:53
So now what you do is you consume less.
00:59
And consumption is part of aggregate demand, right? consumption is in aggregate demand.
01:05
So because you're consuming less, you have less aggregate demand...