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ADJUSTMENT, SHORT-RUN AGGREGATE MARKET: Disequilibrium in the short-run aggregate market induces changes in the price level that restore equilibrium. If the price level is above the short-run equilibrium price level, economy-wide product market surpluses cause the price level to fall. If the price level is below the short-run equilibrium price level, economy-wide product market shortages cause the price level to rise. In both cases short-run equilibrium is restored. You might want to compare adjustment, long-run aggregate market. Price level changes induce changes in both aggregate expenditures and real production. Unlike the long-run aggregate market, changes in the price level can induce changes in short-run aggregate supply, making it greater or less than full-employment real production.
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SLOPE, INVESTMENT LINE The positive slope of the investment line is also termed the marginal propensity to invest (MPI). This slope is greater than zero but less than one, reflecting induced investment. The slope of the investment line affects the slope of the aggregate expenditures line and thus also affects the magnitude of the multiplier process.
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BLUE PLACIDOLA
[What's This?]
Today, you are likely to spend a great deal of time flipping through mail order catalogs wanting to buy either hand lotion, a big bottle of hand lotion or a lighted magnifying glass. Be on the lookout for the happiest person in the room.
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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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"Don't be distracted by criticism. Remember the only taste of success some people have is when they take a bite out of you." -- Zig Ziglar
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LRTC
Long Run Total Cost
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