March 17, 2018 

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RECESSIONARY GAP: The difference between the equilibrium real production achieved in the short-run aggregate market and full-employment real production the occurs when short-run equilibrium real production is less than full-employment real production. A recessionary gap, also termed a contractionary gap, is associated with a business-cycle contraction. This is one of two alternative output gaps that can occur when short-run production differs from full employment. The other is an inflationary gap.

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Lesson 13: Aggregate Demand | Unit 3: The Curve Page: 14 of 22

Topic: Net-Export Effect <=PAGE BACK | PAGE NEXT=>

An increase in the price level decreases exports and increases imports, which gives us a decrease in net exports.
  • If the price level increases in one country, the production of other countries becomes relatively cheaper.
For example:
  • An increase in the U.S. price level discourages foreign buyers from buying U.S. goods, and encourages U.S. buyers to buy relatively cheaper foreign goods.
The net-export effect is that a change in the price level, changes the relative prices of exports and imports, and changes net exports in the opposite way.

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Total revenue generated per unit of a variable input, keeping all other inputs unchanged. Average revenue product, usually abbreviated ARP, is found by dividing total revenue by the variable input or by multiplying average physical product by average revenue. Average revenue product is a part of marginal productivity theory used to analyze the demand for productive inputs.

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Today, you are likely to spend a great deal of time lost in your local discount super center trying to buy either a set of luggage with wheels or a birthday gift for your aunt. Be on the lookout for bottles of barbeque sauce that act TOO innocent.
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During the American Revolution, the price of corn rose 10,000 percent, the price of wheat 14,000 percent, the price of flour 15,000 percent, and the price of beef 33,000 percent.
"If football taught me anything about business, it is that you win the game one play at a time."

-- Fran Tarkenton, Football Player

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