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MARKET DISEQUILIBRIUM: A state of the market that exists when the opposing forces of demand and supply do not balance out and there is an inherent tendency for change. This should be directly (and immediately) contrasted with the entries on equilibrium and market equilibrium. For the market, disequilibrium is indicated by the existence of either a surplus or a shortage. The inherent tendency to change occurs because a surplus causes the price to decline and a shortage causes the price to rise. So long as market disequilibrium persists, the price will be induced to change.

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Lesson 13: Aggregate Demand | Unit 2: Doing More Page: 5 of 22

Topic: Consumption Expenditures <=PAGE BACK | PAGE NEXT=>

The household sector is the group responsible for the consumption part of the aggregate expenditures.

Consumption is the expenditures by the household sector on final goods and services undertaken in a given time period.

Three specific categories of consumption:

  • Nondurable goods Goods lasting less than a year.
  • Durable goods Goods lasting more than a year.
  • Services Intangible activities.
Each consumption category plays a different role in the macroeconomy.

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GOVERNMENT PURCHASES DETERMINANTS

Ceteris paribus factors, other than aggregate income or production, that are held constant when the government purchases line is constructed and which cause the government purchases line to shift when they change. Some of the more important government purchases determinants are fiscal policy and politics.

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Today, you are likely to spend a great deal of time wandering around the downtown area trying to buy either a revolving spice rack or a how-to book on home repairs. Be on the lookout for the last item on a shelf.
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