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ADJUSTMENT, LONG-RUN AGGREGATE MARKET: Disequilibrium in the long-run aggregate market induces changes in the price level that restore equilibrium. If the price level is above the long-run equilibrium price level, economy-wide product market surpluses cause the price level to fall. If the price level is below the long-run equilibrium price level, economy-wide product market shortages cause the price level to rise. In both cases long-run equilibrium is restored. Price level changes induce changes in aggregate expenditures but NOT changes in real production. The reason is that long-run aggregate supply is full-employment real production, which is unaffected by the price level.
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SAVING The after-tax disposable income of the household sector that is not used for consumption expenditures. Saving primarily involves the use of income to purchase legal claims through financial markets rather than the direct purchase of physical goods and services (which is consumption expenditures). In the circular flow model, saving is the diversion of household income away from consumption expenditures and into the financial markets, which then flows to business investment expenditures and government purchases. Saving is one of two basic uses of disposable income. The other is consumption expenditures.
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GREEN LOGIGUIN
[What's This?]
Today, you are likely to spend a great deal of time browsing through a long list of dot com websites seeking to buy either a looseleaf notebook binder or hand lotion, a big bottle of hand lotion. Be on the lookout for rusty deck screws.
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This isn't me! What am I?
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Okun's Law posits that the unemployment rate increases by 1% for every 2% gap between real GDP and full-employment real GDP.
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"The only place success comes before work is in the dictionary. " -- Vince Lombardi
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BOA
Basic Ordering Agreement
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