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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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ECONOMY The system of production, distribution, and consumption of goods and services that a society uses to address the problem of scarcity.
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GREEN LOGIGUIN
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Today, you are likely to spend a great deal of time strolling through a department store wanting to buy either a case of blank recordable DVDs or a pair of red goulashes with shiny buckles. Be on the lookout for the happiest person in the room.
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John Maynard Keynes was born the same year Karl Marx died.
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"No man, for any considerable time, can wear one face to himself and another to the multitude without finally getting bewildered as to which may be true." -- Nathanial Hawthorne, Author
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AACP
American Assocation of Commercial Publications
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