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SELF-CORRECTION, INFLATIONARY GAP: The automatic process through which the aggregate market achieves long-run equilibrium by eliminating an inflationary gap created by short-run equilibrium. With an inflationary gap short-run equilibrium real production is greater than full-employment real production, meaning resource markets have shortages, and in particular labor is overemployed. Self-correction is the process in which these temporary imbalances are eliminated through flexible prices as the aggregate market achieves long-run equilibrium. The key to this process is shifts of the short-run aggregate supply curve caused by changes in wages and other resource prices. The long-run result is lower wages and a decrease in short-run aggregate supply.
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AVERAGE REVENUE PRODUCT CURVE A curve that graphically illustrates the relation between average revenue product and the quantity of the variable input, holding all other inputs fixed. This curve indicates the per unit revenue at each level of the variable input. The average revenue product curve is one of two related curves often used in the analysis of factor demand. The other, and more important, is marginal revenue product curve.
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PURPLE SMARPHIN
[What's This?]
Today, you are likely to spend a great deal of time at an auction looking to buy either a package of 4 by 6 index cards, the ones with lines or a 50 foot extension cord. Be on the lookout for broken fingernail clippers.
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Ragnar Frisch and Jan Tinbergen were the 1st Nobel Prize winners in Economics in 1969.
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"Life is a promise; fulfill it. " -- Mother Teresa, humanitarian
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NIFO
Next In First Out
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