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ADJUSTMENT, LONG-RUN AGGREGATE MARKET: Disequilibrium in the long-run aggregate market induces changes in the price level that restore equilibrium. If the price level is above the long-run equilibrium price level, economy-wide product market surpluses cause the price level to fall. If the price level is below the long-run equilibrium price level, economy-wide product market shortages cause the price level to rise. In both cases long-run equilibrium is restored. Price level changes induce changes in aggregate expenditures but NOT changes in real production. The reason is that long-run aggregate supply is full-employment real production, which is unaffected by the price level.
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Lesson 3: Scarcity | Unit 1: The Concept
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- The fundamental concept of scarcity that faces society.
- The role unlimited wants and needs play in creating the problem of scarcity.
- The role limited resources play in creating the problem of scarcity.
- What the scarcity problem means for society.
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COMPARATIVE ADVANTAGE The ability to produce one good at a relatively lower opportunity cost than other goods, especially compared to production in another country. Every person or country has a comparative advantage in production of at least one good or service, even with relatively limited production technology. A related, but contrasting concept is absolute advantage. Both terms are perhaps most important to the study of international trade, but also provide insight into other exchanges.
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North Carolina supplied all the domestic gold coined for currency by the U.S. Mint in Philadelphia until 1828.
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"Man is born to live, not to prepare for life. " -- Boris Pasternak, writer
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SSAP
Statement of Standard Accounting Practice
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