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SLOPE, LONG-RUN AGGREGATE SUPPLY CURVE: The long-run aggregate supply (LRAS) curve is a vertical line with an infinite slope, reflecting the independent relation between the price level and aggregate real production. A higher price level is associated with the same real production as a lower price level. And this real production is that produced when resources are fully employed, that is, full-employment production. Real production is unaffected by the price level because prices are flexible in the long run. Long-run price flexibility ensures that ALL markets (product, financial, and resource) are in equilibrium.
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SLOPE, AGGREGATE EXPENDITURES LINE The positive slope of the aggregate expenditures line is the sum of the marginal propensity to consume (MPC), marginal propensity to invest (MPI), and marginal propensity for government purchases (MPG), less the marginal propensity to import (MPM). This slope is greater than zero but less than one, reflecting induced expenditures by the four macroeconomic sectors (household, business, government, and foreign). The slope of the aggregate expenditures line determines the magnitude of the multiplier process.
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WHITE GULLIBON
[What's This?]
Today, you are likely to spend a great deal of time browsing about a thrift store hoping to buy either decorative celebrity figurines or a flower arrangement with anything but tulips for your grandfather. Be on the lookout for strangers with large satchels of used undergarments.
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This isn't me! What am I?
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Mark Twain said "I wonder how much it would take to buy soap buble if there was only one in the world."
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"Be willing to have it so. Acceptance of what has happened is the first step to overcoming the consequences of any misfortune." -- William James, Psychologist
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MRS
Marginal Rate of Substitution
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