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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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FACTORS OF PRODUCTION Labor, capital, land, and entrepreneurship used by society to produce consumer satisfying goods and services. Factors of production are also termed resources or scarce resources.
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BROWN PRAGMATOX
[What's This?]
Today, you are likely to spend a great deal of time wandering around the downtown area trying to buy either blue cotton balls or a genuine down-filled pillow. Be on the lookout for small children selling products door-to-door.
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Potato chips were invented in 1853 by a irritated chef repeatedly seeking to appease the hard to please Cornelius Vanderbilt who demanded french fried potatoes that were thinner and crisper than normal.
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"Everyone is bound to bear patiently the results of his own example. " -- Phaedrus, Philosopher
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OMO
Open Market Operations
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