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KEYNESIAN AGGREGATE EXPENDITURE MODEL: The generic term for several graphical models used to analysis the basic components of Keynesian economics and to identify Keynesian equilibrium as the intersection of the aggregate expenditures line and the 45-degree line. Differences among the specific models are based on which sectors are included (household, business, government, and foreign) and whether expenditures are induced or autonomous.
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Lesson 4: Production Possibilities | Unit 1: Getting Started
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Page: 2 of 24
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Every economic analysis builds on certain preconditions or assumptions. Assumptions, whether reasonable or seemingly unrealistic, let us:- Establish abstract benchmarks for comparison or
- Break an analysis into simpler, more easily manageable parts.
Four key assumptions: - Two Goods: Resources are used to produce one or both of only two goods. This is a simplifying assumption that lets us display graphs on the screen.
- Fixed Resources: The quantities of the labor, capital, land, and entrepreneurship resources do not change. This is a reasonable assumption that we can change to analysis resource changes.
- Fixed Technology: The information and knowledge that society has about the production of goods and services is fixed. This is another reasonable assumption that we can change to analysis technology changes.
- Technical Efficiency: Resources are used in a technically efficient way. We get the maximum possible production out of the resource inputs.
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AGGREGATE MARKET An economic model relating the price level and real production that is used to analyze business cycles, gross production, unemployment, inflation, stabilization policies, and related macroeconomic phenomena. The aggregate market, inspired by the standard market model, but adapted to the macroeconomy, captures the interaction between aggregate demand (the buyers) and short-run and long-run aggregate supply (the sellers). Also known by the names AS-AD model or income-price model, the aggregate market is THE cornerstone model of macroeconomic analysis.
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BROWN PRAGMATOX
[What's This?]
Today, you are likely to spend a great deal of time searching the newspaper want ads seeking to buy either a set of serrated steak knives, with durable plastic handles or a pair of blue silicon oven mitts. Be on the lookout for infected paper cuts.
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This isn't me! What am I?
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The wealthy industrialist, Andrew Carnegie, was once removed from a London tram because he lacked the money needed for the fare.
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"Each of us is issued but one life, and we know full well how it all ends. It would be regrettable to squander this one chance on someone else's appearance, someone else's experience. " -- Joseph Brodsky, Writer
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TFP
otal Factor Productivity
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