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INCOME-PRICE MODEL: An economic model relating the price level (the price part) and real production (the income part) that is used to analyze business cycles, aggregate production, unemployment, inflation, stabilization policies, and related macroeconomic phenomena. The income-price model, inspired by the standard market model, captures the interaction between aggregate demand (the buyers) and short-run and long-run aggregate supply (the sellers).
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INFLATION CAUSES Inflation, the persistent increase in the average price level, can be caused by an increase in aggregate demand or a decrease in aggregate supply. This suggests two basics sources, causes, or types of inflation--demand-pull inflation and cost-push inflation. While short-term bouts of inflation (up to several months) can result from anything (determinant) that might cause either increases in aggregate demand or decreases in aggregate supply, long-term inflation (a year or more) is possible ONLY through persistent increases in the money supply. As such, while demand-pull inflation and cost-push inflation are convenient ways to catalog the transmission mechanisms of inflation, the ultimate CAUSE of inflation is money.
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GRAY SKITTERY
[What's This?]
Today, you are likely to spend a great deal of time strolling around a discount warehouse buying club seeking to buy either throw pillows for your bed or a package of blank rewritable CDs. Be on the lookout for gnomes hiding in cypress trees.
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The average length of a "business lunch" is about 36 minutes.
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"One person with a belief is equal to a force of ninety-nine with only interests." -- John Stuart Mill
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IEBNR
Income Earned But Not Received
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