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LAW OF DIMINISHING MARGINAL RETURNS: A principle stating that as more and more of a variable input is combined with a fixed input in short-run production, the marginal product of the variable input eventually declines. This is THE economic principle underlying the analysis of short-run production for a firm. Among a host of other things, it offers an explanation for the upward-sloping market supply curve. How does the law of diminishing marginal returns help us understand supply? The law of supply and the upward-sloping supply curve indicate that a firm needs to receive higher prices to produce and sell larger quantities. Why do they need higher prices?
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DECISION LAG The time lag that it takes government leaders and policy makers to determine the appropriate government action needed to address an economic problem. The decision lag arises because it takes time for policy makers to chose among the array of possible policy actions, each with assorted consequences that appeal differently to different political constituencies. This "inside lag" is one of four policy lags associated with monetary and fiscal policy. The other two "inside lags" are recognition lag and implementation lag, and one "outside lag" is implementation lag. All four policy lags can reduce the effectiveness of business-cycle stabilization policies and can even destabilize the economy.
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GRAY SKITTERY
[What's This?]
Today, you are likely to spend a great deal of time watching the shopping channel wanting to buy either a pair of leather sandals that won't cause blisters or clothing for your kitty cats. Be on the lookout for infected paper cuts.
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This isn't me! What am I?
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John Maynard Keynes was born the same year Karl Marx died.
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"It is not the mountain we conquer, but ourselves. " -- Sir Edmund Hillary, Explorer
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DOC
Department of Commerce
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