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DIAMOND-WATER PARADOX: The perplexing observation that water, which is more useful than diamonds, has a lower price. If price is related to utility, how can this occur? This paradox was first proposed by classical economists in the 19th century and was subsequently used as a stepping stone for developing the notion of marginal utility and the role it plays in the demand price of a good. The paradox is magically cleared up with an understanding of marginal utility and total utility. People are willing to pay a higher price for goods with greater marginal utility. As such, water which is plentiful has enormous total utility, but a low price because of a low marginal utility. Diamonds, however, have less total utility because they are less plentiful, but a high price because of a high marginal utility.
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INFLATIONARY GAP, KEYNESIAN MODEL The difference between equilibrium aggregate production achieved in the Keynesian model and full-employment aggregate production that occurs when equilibrium aggregate production is greater than full-employment aggregate production. An inflationary gap, also termed an expansionary gap, is associated with a business-cycle expansion. The prescribed Keynesian remedy for an inflationary gap is contractionary fiscal policy. This is one of two alternative output gaps that can occur when equilibrium generates production that differs from full employment. The other is a recessionary gap.
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YELLOW CHIPPEROON
[What's This?]
Today, you are likely to spend a great deal of time visiting every yard sale in a 30-mile radius hoping to buy either a large, stuffed giraffe or a birthday greeting card for your aunt. Be on the lookout for telephone calls from long-lost relatives.
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This isn't me! What am I?
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In the early 1900s around 300 automobile companies operated in the United States.
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"The past cannot be changed. The future is yet in your power. " -- Hugh White, U.S. Senator
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CPI-W
Consumer Price Index-Urban Wage Earners and Clerical Workers
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