Before revision:  Motivated by these observations, this paper develops a simple policy-oriented business-cycle model in which (1) fluctuations in aggregate demand and supply lead to fluctuations in slack but not in inflation; and (2) the aggregate demand structure is consistent with permanent liquidity traps. The model extends the money-in-the-utility-function model by introducing matching frictions and including real wealth into the utility function .
After revision:  Motivated by these observations, this paper develops a simple policy-oriented business-cycle model in which (1) fluctuations in aggregate demand and supply shocks. Second, wealth enters the utility function .