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DEMAND-DRIVEN BUSINESS CYCLES: Business cycle instability caused by changes in one or more of the four aggregate demand expenditures on gross domestic product--consumption, investment, government purchases, and net exports. This is one of two basic types of business cycles; the other being supply-drive business cycle. Demand-driven business cycles tend to be the more common of the two types. In general, demand-driven business cycles are more responsible for short-term instability, while supply-driven business cycles tend to be more closely associated with long-run changes in the economy.

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FULL EMPLOYMENT, LONG-RUN AGGREGATE SUPPLY

The condition that exists when all resources are engaged in production. In practice, however, this condition is virtually impossible to achieve. An economy ALWAYS has some unemployed resources, particularly frictional and structural unemployment. The key characteristic of long-run aggregate supply is that full-employment production is maintained at ALL price levels. In the long run, when all prices and wages are flexible, all markets (financial, product, and especially resource) are in equilibrium, and the level of real production fully employs all available resources.

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Today, you are likely to spend a great deal of time flipping through mail order catalogs wanting to buy either super soft, super cuddly, stuffed animals or a large stuffed brown and white teddy bear. Be on the lookout for the happiest person in the room.
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Two and a half gallons of oil are needed to produce one automobile tire.
"Perhaps the most valuable result of all education is the ability to make yourself do the thing you have to do, when it ought to be done, whether you like it or not; it is the first lesson that ought to be learned; and however early a man's training begins, it is probably the last lesson that he learns thoroughly. "

-- Thomas H. Huxley, Scientist

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