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INDEX: A measure of the relative average of a group of items compared to a given base value. Index measures are commonly used in economics to combine and compare diverse measures. One common type of index measure is for prices, such as the Consumer Price Index and the Dow Jones Industrial Average of corporate stock prices. Another noted type of index measure is to track macroeconomic activity, especially the index leading economic indicators. Indexes are usually weighted averages rather than simple arithmetic means that are measured relative to a base value or period. The Consumer Price Index, for example, measures the prices of consumer good, weighted by the quantities purchased. The value of a given period is then stated relative to a base year value, which generates a pure, "unitless" number in the range of 100 (give or take).
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Lesson Contents
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Unit 1: The Concept |
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Unit 2: Doing More |
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Unit 3: The Curve |
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Unit 4: Determinants |
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Unit 5: Policies Plus | |
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Aggregate Demand
This lesson introduces aggregate demand, the demand-side of the aggregate market. The aggregate market is the key model used to explain and analyze the workings of the macroeconomy and aggregate demand is a critical half of this model (the other is aggregate supply). Taking a clue from market demand, this lesson examines the nature of aggregate demand, including the relation between the price level and aggregate expenditures, the reason the aggregate demand curve is negatively sloped, and the assorted aggregate demand determinants that cause the aggregate demand curve to shift. - The first unit of this lesson introduces the concept of aggregate demand and how it fits into the study of macroeconomics in terms of the aggregate market and circular flow.
- In the second unit, we example the four aggregate expenditures -- consumption, investment, government purchases, and net exports -- the make up aggregate demand.
- The third unit then examines the aggregate demand curve that captures the aggregate demand relation between the price level and aggregate expenditures, especially the importance of the real-balance, interest-rate, and net-export effects.
- A look at the assorted aggregate demand determinants that shift the aggregate demand curves is the topic of the fourth lesson.
- We end this lesson in the fifth unit with a look how demand-management policies work to stabilize business cycles through aggregate demand.
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INSTITUTION An established method or way of performing an activity that is widely accepted throughout society. Institutions provide the rules, guidelines, and structure needed to carry out day-to-day economic activities, such as production, consumption, and exchange.
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PINK FADFLY
[What's This?]
Today, you are likely to spend a great deal of time looking for a downtown retail store wanting to buy either a coffee cup commemorating the 2000 Olympics or a birthday gift for your grandmother. Be on the lookout for a thesaurus filled with typos.
Your Complete Scope
This isn't me! What am I?
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Cyrus McCormick not only invented the reaper for harvesting grain, he also invented the installment payment for selling his reaper.
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"Something in human nature causes us to start slacking off at our moment of greatest accomplishment. As you become successful, you will need a great deal of self-discipline not to lose your sense of balance, humility and commitment." -- H. Ross Perot
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KLIC
Kullback-Leibler Information Criterion
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