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UNSTABLE EQUILIBRIUM: An equilibrium that is NOT restored if disrupted by an external force. This should be contrasted with stable equilibrium. While most equilibria studied in economics are of the stable variety, a few cases of unstable equilibria do emerge from time to time, in limited circumstances.
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Lesson 11: Circular Flow | Unit 3: Government
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Page: 13 of 22
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Topic:
Government Purchases
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Government spending is divided into government purchases of GDP and transfer payments.- Transfer payments include welfare to the poor, unemployment compensation, and Social Security benefits.
- Transfer payments are like negative taxes, but flow from the government sector to the household sector.
- The circular tax flow is the net tax flow from households to government, taxes minus transfer payments.
- Government purchases are the green flow from the government sector to the product markets.
- As an expenditure on GDP, government purchases are comparable to consumption by the household sector and investment by the business sector.
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EASY MONEY A general condition of the economy in which money is relatively abundant and plentiful. In modern times, this condition arises when the monetary authority (Federal Reserve System) undertakes expansionary monetary policy. With easy money, interest rates are generally lower, but inflation tends to creep higher. The alternative to easy money is tight money.
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Parker Brothers, the folks who produce the Monopoly board game, prints more Monopoly money each year than real currency printed by the U.S. government.
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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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CPSC
Consumer Product Safety Commission
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