Economics

A neglected part of modern economics is asset prices. These impact on aggregate demand through expenditure from loans secured on assets or from sales of assets used for consumption and saving. Since assets are huge compared to an economy's GDP, about £6,000 pounds in the UK, this makes even a small rise, (house prices rise by an average of 10% per year) have a lasting impact on the economy. However, economics does not have a consistent rigorous theory which applies these facts into the determination of aggegate demand. Since assets are often used for investment, for example when a company sells shares, there is an impact on aggegate supply.