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HOSTILE ACQUISITION: In the world of mergers, the acquisition of one company by another against the wishes of the company being acquired. Also termed a hostile takeover, this is accomplished by purchasing controlling interest in the stock of the acquired company, usually by offering to pay a price exceeding the current market price. A hostile takeover might be motivated to eliminate competition, to sell off the assets of the company for more that the takeover payment, or to temporarily inflate the price of the stock.

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Lesson 16: Aggregate Shocks | Unit 4: Complex Shifts Page: 15 of 21

Topic: AD Decrease <=PAGE BACK | PAGE NEXT=>

The case of an decrease in the AD curve. Let's start at long-run equilibrium. All three curves, AD, LRAS, and SRAS, intersect at the same long-run equilibrium values, Po and Qf.
  • With a leftward shift of the AD curve, the aggregate market achieves short-run equilibrium at a lower price level and less real production.
  • The labor market imbalance causes wages and production cost to fall. The SRAS shifts rightward. It stops shifting when it intersects the new AD and the original LRAS curves for a new long-run equilibrium. The price level is even lower and real production returns to full employment.

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A curve that graphically represents the relation between average revenue received by a perfectly competitive firm for selling its output and the quantity of output sold. Because average revenue is essentially the price of a good, the average revenue curve is also the demand curve for a perfectly competitive firm's output.

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Much of the $15 million used by the United States to finance the Louisiana Purchase from France was borrowed from European banks.
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