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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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DEMAND ELASTICITY AND TOTAL EXPENDITURE The notion that price-induced changes in total expenditure (price times quantity) depend on the relative price elasticity of demand. If demand is relatively elastic, then changes in price cause total expenditure to change in the opposite direction. If demand is relatively inelastic, then changes in price cause total expenditure to change in the same direction. If demand is unit elastic, then changes in price do not cause any change in total expenditure.
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PINK FADFLY
[What's This?]
Today, you are likely to spend a great deal of time touring the new suburban shopping complex looking to buy either an ink cartridge for your printer or a rechargeable battery for your camera. Be on the lookout for vindictive digital clocks with revenge on their minds.
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This isn't me! What am I?
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The portrait on the quarter is a more accurate likeness of George Washington than that on the dollar bill.
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"Never let the fear of striking out get in your way. " -- Babe Ruth, baseball player
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Q-RATIO
Ratio of Total Market Value of Physical Assets
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