Think about the last purchase you made. How did the money you spent on this good

Question

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). Pick one scenario:
Scenario 1: 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.
Scenario 2: Aggregate Supply exceeds Aggregate Demand
The sale of your refrigerators decline unexpectedly (due to an economic recession). As you are experiencing a decrease in sales, everyone else in the economy is experiencing the same decline. AS is now going to be greater than AD. Business inventories are increasing. What are some reasons why there is this decrease in AS? Explain the chain reaction that would ensue.

Explanation / Answer

When we purchase a good the money we pay is used by the seller for his purchases. So by buying with an X amnt v r increaswing the nations income by more than X as the purchase made by the seller also increases the national GDP Scenario1 : this is because of more multiplier effect. more and more money is being spent so demand for goods is increasing. in this case refrigerators.less money is being saved . this will lead to inflation due to high price rises

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