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DISSAVING: Negative saving during a given period of time in which consumption expenditures exceed disposable income. Dissaving is made possible by spending past or future disposable income on current consumption, that is, using income saved from previous periods or borrowing income to be earned in future periods. Saving is generally illustrated by the vertical difference when between the consumption line and the 45-degree line. Dissaving results when the 45-degree line lies above the consumption line.
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Lesson Contents
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Unit 1: The Concept |
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Unit 2: Equilibrium |
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Unit 3: Doing Curves |
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Unit 4: Self Correction |
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Unit 5: Policy Preview | |
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Aggregate Market
This lesson is devoted to the exposition of the aggregate market, which combines the aggregate demand curve and the two aggregate supply curves into two related models used to analyze the macroeconomy. The main focus of this lesson is on how each of the two models, one for the short run and one for the long run, achieve equilibrium. A key conclusion is that the short-run equilibrium does not necessarily correspond to the full-employment production achieved by the long-run equilibrium. This creates recessionary and inflation gaps, which correspond to the macroeconomic problems of unemployment and inflation. - In the first unit of this lesson we ponder the basics of the aggregate market, including the importance of aggregate demand, aggregate supply, the price level, real production, unemployment, and inflation.
- Moving into the second unit, we review the concept of equilibrium and see how it relates to the aggregate market in both the short run and the long run.
- The third unit analyzes short and long-run equilibrium by combining the aggregate demand, short-run aggregate supply, and long-run aggregate supply curves.
- The topic of self-correction is examined in the fourth unit, especially how automatic shifts of the short-run aggregate supply curve can eliminate recessionary and inflationary gaps.
- The fifth and final unit of this lesson previews the use of the aggregate market to analyze business cycle stabilization policies, with particular emphasis on the time period of adjustment.
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PROCESS INNOVATION An innovation that is an improvement in an existing product, technology, or idea or an improvement in the way a product, technology, or idea is produced. The contrast is with a product innovation, which is an innovation of a new product, technology, or idea that generates a beneficial improvement in society and the economy; one that is fundamentally different from existing products, technologies, or ideas.
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Ragnar Frisch and Jan Tinbergen were the 1st Nobel Prize winners in Economics in 1969.
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"I learned about the strength you can get from a close family life. I learned to keep going, even in bad times. I learned not to despair, even when my world was falling apart. I learned that there are no free lunches. And I learned the value of hard work. " -- Lee Iacocca
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AR(N)
A nth-order Autoregressive Process
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