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ECONOMICS: A social science that studies the allocation of limited resources to the production of goods and services used to satisfy consumer's unlimited wants and needs. Five notable phrases contained in this definition that need further study are: (1) social science, (2) allocation, (3) limited resources, (4) production, and (5) unlimited wants and needs.
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Lesson 13: Aggregate Demand | Unit 3: The Curve
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Page: 13 of 22
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Topic:
Interest-Rate Effect
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Changes in the interest rate can alter consumption and investment spending. Changes in the investment and consumption spending that occur when changes in the price level cause changes in the interest rate is the interest-rate effect. - Investment and consumption expenditures are made with borrowed funds. The interest rate affects the cost of borrowing these funds.
- The price level affects the interest rate:
- A higher price level induces a higher interest rate, which raises the cost of borrowing and discourages investment and consumption.
- A lower price level induces a lower interest rate, which reduces the cost of borrowing and encourages investment and consumption.
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NEAR MONIES Relatively liquid financial assets that are not used as the medium of exchange, but which can be quickly and easily converted to money with little or no loss of value. One group of near monies, best thought of as household savings, are added to M1 to obtain M2 and another group of near monies, best thought of as short-term institutional investments, are added to M2 to obtain M3.
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BROWN PRAGMATOX
[What's This?]
Today, you are likely to spend a great deal of time waiting for visits from door-to-door solicitors wanting to buy either pink cotton balls or a genuine down-filled comforter. Be on the lookout for the last item on a shelf.
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In 1914, Ford paid workers who were age 22 or older $5 per day -- double the average wage offered by other car factories.
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"Sometimes when you innovate, you make mistakes. It is best to admit them quickly and get on with improving your other innovations. " -- Steve Jobs, Apple Computer founder
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LIML
Limited Information Maximum Likelihood
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