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RECESSIONARY 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 less than full-employment aggregate production. A recessionary gap, also termed a contractionary gap, is associated with a business-cycle contraction. The prescribed Keynesian remedy for a recessionary gap is expansionary 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 an inflationary gap.
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Lesson 1: Economic Basics | Unit 5: Policies
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Page: 16 of 18
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Several problems prevent market deficiencies from being efficiently corrected by government action. Government imperfections: - Voter Apathy: When people don't vote, leaders don't know what the public really wants.
- Special Interest Groups: Those with influence, can adversely affect government policies.
- Re-election Minded Politicians: Leaders who please only a few, won't represent everyone.
- Complex Bureaucracies: Complexity keeps public workers from being responsible for their actions.
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CAPITALISM A type of economy, or economic system, based on--(1) private ownership of most resources, goods, and other assets; (2) freedom to generally use the privately-owned resources, goods, and other assets to get the most wages, rent, interest, and profit possible; and (3) a system of relatively competitive markets.
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The average length of a "business lunch" is about 36 minutes.
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"The vacuum created by failure to communicate will quickly be filled with rumor, misrepresentations, drivel and poison. " -- C. Northcote Parkinson, historian
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IER
International Economic Review
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