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MACRO GOALS: The three goals of a mixed economy that are most relevant to the study of macroeconomics are full employment, stability, and economic growth. Full employment is the condition in which all of the economy's available resources are engaged in the production of goods and services. Stability is the condition in which the economy avoids large changes in production, employment, and especially prices. Economic growth is the condition in which the economy's production possibilities are expanding over time.
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Lesson 11: Circular Flow | Unit 1: Basic Flow
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Page: 6 of 22
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- The circular flow model, which is the continuous production and consumption interaction among the four major sectors-household, business, government, and foreign-- that takes place through the three aggregated macroeconomic markets--product, factor and financial.
- The basic role of the sectors--household, business, government and foreign--of the economy.
- The three aggregated markets: (a) Product markets: All markets in the economy that exchange final goods and services. (b) Factor markets: All markets that exchanges the services of the economy's labor resources. (c) Financial markets: All markets that trade financial instruments.
- The physical flow, which is the counter-clockwise flow of resources from the household to the business sector and of production from the business to the household sector.
- The payment flow, which is the clockwise flow of payment for resources purchased by the business from the household sector and of payment for production purchased by the household to the business sector.
- The continuous circular flow of payments: GDP used for factor payments, which becomes national income, which is used for consumption to buy GDP.
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AGGREGATE MARKET An economic model relating the price level and real production that is used to analyze business cycles, gross production, unemployment, inflation, stabilization policies, and related macroeconomic phenomena. The aggregate market, inspired by the standard market model, but adapted to the macroeconomy, captures the interaction between aggregate demand (the buyers) and short-run and long-run aggregate supply (the sellers). Also known by the names AS-AD model or income-price model, the aggregate market is THE cornerstone model of macroeconomic analysis.
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BROWN PRAGMATOX
[What's This?]
Today, you are likely to spend a great deal of time flipping through the yellow pages trying to buy either a green fountain pen or a handcrafted bird house. Be on the lookout for spoiled cheese hiding under your bed hatching conspiracies against humanity.
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This isn't me! What am I?
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The penny is the only coin minted by the U.S. government in which the "face" on the head looks to the right. All others face left.
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"God gives talent; work transforms talent into genius. " -- Anna Pavlova, ballerina
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DRR
Discounted Rate of Return
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