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WANT: This is often thought of as a psychological desire which makes life just a little more enjoyable, but which is not physiological necessary to life. You need oxygen, but you want a hot fudge sundae. Satisfaction is achieved by fulfilling wants.

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Lesson 16: Aggregate Shocks | Unit 5: Synthesis Page: 20 of 21

Topic: Business Cycles <=PAGE BACK | PAGE NEXT=>

To illustrate a business cycle, let's begin with long-run, full-employment equilibrium.
  • With an expansion, consumers have accumulated durable goods.
  • This decreases consumption spending and aggregate demand. The AD curve shifts leftward. We have a recession.
  • Before the SRAS curve automatically shifts to restore full employment, people start buying durable goods again and the AD curve shifts rightward. We have a recovery.
  • The AD curve doesn't stop at full employment. With our expansion we have (possibly) inflation.
  • But accumulation of durable goods causes a decrease in aggregate demand again and another recession.
  • The process continues.

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AVERAGE FIXED COST CURVE

A curve that graphically represents the relation between average fixed cost incurred by a firm in the short-run product of a good or service and the quantity produced. This curve is constructed to capture the relation between average fixed cost and the level of output, holding other variables, like technology and resource prices, constant. The average fixed cost curve is one of three average curves. The other two are average total cost curve and average variable cost curve. A related curve is the marginal cost curve.

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APLS

BLACK DISMALAPOD
[What's This?]

Today, you are likely to spend a great deal of time at the confiscated property police auction hoping to buy either an ink cartridge for your printer or a rechargeable battery for your camera. Be on the lookout for empty parking spaces that appear to be near the entrance to a store.
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This isn't me! What am I?

The average length of a "business lunch" is about 36 minutes.
"The vacuum created by failure to communicate will quickly be filled with rumor, misrepresentations, drivel and poison. "

-- C. Northcote Parkinson, historian

SIPP
Survey of Income and Program Participation
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