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PARETO EFFICIENCY: A type of efficiency that results if one person can not be made better off without making someone else worse off. Named after Vilfredo Pareto, this criterion is the guiding theoretical notion of efficiency used in the study of economics, especially welfare economics. Pareto efficiency is generally not attained if some resources are idle or unemployed. By engaging idle resources in production, some people can have more production without reducing that available to others. A problem with Pareto efficiency, however, is that it is based on the existing distribution of income and wealth. This is one of two noted efficiency criteria used in economics. The other is Kaldor-Hicks efficiency.

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Lesson 19: Money Creation | Unit 2: Fred Returns Page: 8 of 23

Topic: Money Creation <=PAGE BACK | PAGE NEXT=>

The money creation mechanism is a profitable opportunity.
  • With 10% of his receipts redeemed at any given time Fred can issue up to 1,000 pounds of receipts.
  • 100 pounds for the original deposits plus another 900 pounds for loans.
Important points:
  • Fred has created money: Because his receipts are money, he can create money by making loans.
  • The new extra 900 pounds of money is used for investment that promotes economic growth.
A precarious balancing act:
  • If people redeem more than the 10% of the receipts, Fred is in trouble.
  • If so, the receipts become worthless, the money supply shrinks, and the local economy enters a recession.

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TOTAL PRODUCT AND AVERAGE PRODUCT

A graphical connection between the total product curve and the average product curve stating that the slope of a line between the origin and any point on the total product curve is equal to the average product. Imagine a ray shooting from the origin and hitting the total product curve. As this ray hits each point on the curve, remaining anchored at the origin, the slope of the ray changes, and the slope of this ray is average product.

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APLS

BLUE PLACIDOLA
[What's This?]

Today, you are likely to spend a great deal of time flipping through mail order catalogs trying to buy either a lighted magnifying glass or a small, foam rubber football. Be on the lookout for small children selling products door-to-door.
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This isn't me! What am I?

The standard "debt" notation I.O.U. does not mean "I owe you," but actually stands for "I owe unto..."
"Lead the life that will make you kindly and friendly to everyone about you, and you will be surprised what a happy life you will lead."

-- Charles M. Schwab

PPP
Purchasing Power Parity
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