But in the opposite case, if the firms do not pursue the profit-maximizing goal at all, and aspire only to get a sufficient amount of revenue for the sake of the liquidation of indebtedness, expansionary government policy in the phase of slump generates not stagflation but the "deflationary expansion". Why? As we have aleady pointed out, the decreasing demand can force firms to raise prices to escape from financial crash. We suppose that the situation is possible when the increase in the demand (caused by the government) can remove the incentives to raise prices. If the firms simultaneusly try to stimulate the demand expansion by the prices decrease, the emergence of "deflationary expansion" becomes beyond doubt. In the case of the US economy huge federal budget deficit was, possibly, one of the factors contributed to the deflationary economic recovery in the 1980s. This conclusion can be used in the discussion against the Monetarists and New Classical economists arguing that any expansionary government policy is either completely ineffective or stagflation- ary. Actually the government can not only eliminate stagflation in the inside money economy but also transform it into non-inflationary prosperity. In such a "non-standard" situation supply side policies can be... inflationary)! The improvement of the production possibilities causes not only the increase in output, but also inflation. The point is that such event generates the increase in the output, and this increase can be purchased by spenders only at higher prices, because Fisher effect matters! Inflation can decrease the real burden of debts and allow the businesses to dissave for the sake of the purchase of the increased output produced by means of the improved production possibilities.

We must repeat that these "miracles" can end up very quickly, after the majority of the firms and households will meet their huge financial obligations. If a slump is very severe and before the business firms were able to redeem the debts, they had gone bankrupt, the above events do not occur in reality and the "traditional" macroeconomic relationships hold.

Moreover, the complicated macroeconomic relationships of the real world inside money economy cannot be fully described by the AS-AD model. The point is that this model - as any supply-demand model - is usually based on the assumption that producers and spenders are price-takers. As we will prove below, the modern inside money economy is oligopolistic and the business firms possess the price control. This fact makes the application of the AS- AD model in some degree senseless. Therefore, the economists are forced to make such special assumptions, as "ratchet effect" (the price level downward rigidity when aggregate demand falls in the conditions of mass unemployment, that is to say, aggregate supply curve is horizontal), in order to retain realistic elements of this model under imperfect competition.

We believe, however, that the above reasonongs - using the language of AS and Ad relationships - properly describe the phase of recession as it really takes place in the inside money economy. The decreases in the demand cause the business firms to raise their prices in order to provide themselves with the revenue sufficient for the redemption of financial obligations. At the same time, firms may obtain funds not by the price rise but by the means of the output expansion at the decreasing prices. We suppose, however, that the former strategy takes place when the demand is falling: and the latter strategy takes place when the demand is low or is rising and/ or Fisher effect become negligible. If the firms follow the latter strategy and Fisher effect is dominating, the debt-deflation is possible. But, it seems to us, that this possibility is very unlikely to be occur. Fisher effect matters when the threat of financial collapse and credit crunches is very likely to occur, and the firms try first to raise their prices. The increase of output at the lower prices is carried out by the firms when the above-mentioned threat become little less dangerous and Fisher effect is weaker than other (Pigou, Keynes and net export) ones, but the redemption problem is still important. These conclusions can be explained by means of the fact of the demand inelasticity in the short run and the one elasticity in the long run (Eichner, 1973). When the demand is falling, and "a debt-depression is all around", firms are forced to obtain funds very quickly in order to survive to liquidate their debts. They are ready to get the immediate