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REFERENCE WEEK: The calendar week (Sunday through Saturday) containing the 12th day of the month, which is used in the Current Population Survey (CPS) as the time period for documenting the employment and labor force status of respondents. The estimation of the unemployment rate and other employment information generated by the CPS are based on activities of survey respondents during this week. The actual survey is conducted by interviewers working for the Bureau of the Census during the calendar week containing the 19th day, which is termed the survey week.

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Lesson Contents
Unit 1: The Concept
  • What It Is
  • Two Sides: SRAS
  • Two Sides: LRAS
  • Two Sides: AD
  • Two Traits
  • Unit 1 Summary
  • Unit 2: Equilibrium
  • Concept
  • Three Markets
  • Moving Target
  • Unit 2 Summary
  • Unit 3: Doing Curves
  • Long-Run Equilibrium
  • Long-Run Disequilibrium: Too High
  • Long-Run Disequilibrium: Too Low
  • Short-Run Equilibrium
  • Unit 3 Summary
  • Unit 4: Self Correction
  • Short Run
  • Recessionary Gap
  • Inflationary Gap
  • Unit 4 Summary
  • Unit 5: Policy Preview
  • Time
  • Time of Adjustment
  • Unit 5 Summary
  • Course Home
    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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    GOVERNMENT BORROWING

    The acquisition of funds through the financial markets by the government sector which are used to finance government expenditures. In terms of the simple circular flow model, this is one of two basic demands for household saving diverted into financial markets. The other is investment borrowing. Government borrowing is also one of two methods of financing government expenditures. The other is taxes.

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    APLS

    BROWN PRAGMATOX
    [What's This?]

    Today, you are likely to spend a great deal of time searching for rummage sales trying to buy either a pair of blue silicon oven mitts or a coffee cup commemorating the 2000 Olympics. Be on the lookout for high interest rates.
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    This isn't me! What am I?

    Paper money used by the Commonwealth of Massachusetts prior to the U.S. Revolutionary War, which was issued against the dictates of Britain, was designed by patriot and silversmith, Paul Revere.
    "When I stand before God at the end of my life, I would hope that I would not have a single bit of talent left, and could say, I used everything you gave me."

    -- Erma Bombeck, writer

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