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January 18, 2019 

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THREE-SECTOR KEYNESIAN MODEL: A model used to identify equilibrium in Keynesian economics based on aggregate expenditures by the three domestic sectors (household, business, and government). Equilibrium is achieved at the intersection of the aggregate expenditures line, AE = C + I + G, and the 45-degree line, Y = AE. This is Keynesian aggregate expenditures model can be used to analyzed the impact of government fiscal policy on aggregate expenditures and equilibrium.

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Lesson 12: Business Cycles | Unit 1: Instability Page: 1 of 26

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It's a fact of life that the economy is unstable. Like a roller coaster rises and falls, the economy expands and contracts.
  • The economy goes up and down, twisting and turning along the way.
  • In general, we prefer the good that comes with a rising, expanding economy and don't like the bad that comes with a falling, contracting one.
  • The fluctuations in the economy never stop.
  • It is difficult for the economy to run full speed at all times.
  • Economic fluctuations go by the term business cycles.

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FREE TRADE AREAS

A group of nations that have agreed to eliminate (or at least minimize) trade barriers -- especially tariffs, import quotas, and assorted regulatory non-tariff barriers -- within the group to encourage mutual trade. Free trade areas are usually contiguous or adjacent nations, often located on the same continent. Three noted free trade areas are comprised of nations located in North America, Europe, and Asia.

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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 Thor Heyerdahl's Pacific crossing aboard the Kon-Tiki or a rechargeable battery for your cell phone. Be on the lookout for jovial bank tellers.
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Potato chips were invented in 1853 by a irritated chef repeatedly seeking to appease the hard to please Cornelius Vanderbilt who demanded french fried potatoes that were thinner and crisper than normal.
"Twenty years from now you will be more disappointed by the things that you didn't do than by the ones you did do. So throw off the bowlines. Sail away from the safe harbor. Catch the trade winds in your sails. Explore. Dream. Discover."

-- Mark Twain

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