March 18, 2018 

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RATIONAL ABSTENTION: The decision not to do something because the cost of doing it is more than the expected benefit. While this is a common part of everyday life, it's particularly important for voting. During a given election, a number of potential voters are likely to chose NOT to vote because they expect to get little or no benefit from doing so.

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Lesson 8: Market Shocks | Unit 1: Adjustments Page: 1 of 20

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In this lesson we use the market as a tool to understand our economic world, specifically, we see how markets move from one equilibrium to another.

One goal of this lesson:

  • Use the market model to examine the why and how of market shocks, adjustments to a new equilibrium.
Why do we do this?
  • Markets in the real world do not remain at the same equilibrium forever. Markets move. Prices and quantities change.
  • To understand real world changes, we need to analyze what happens to the market when a shock disrupt it.

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    Household saving that does not depend on income or production (especially disposable income, national income, or even gross domestic product). That is, changes in income do not generate changes in saving. Autonomous saving is best thought of as a baseline level of saving (usually negative) that the household sector undertakes in the unlikely event that income falls to zero. It is measured by the intercept term of the saving function or the saving line. The alternative to autonomous saving is induced saving, which does depend on income.

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    Today, you are likely to spend a great deal of time searching the newspaper want ads looking to buy either a birthday gift for your father that doesn't look like every other birthday gift for your father or a green fountain pen. Be on the lookout for high interest rates.
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    The earliest known use of paper currency was about 1270 in China during the rule of Kubla Khan.
    "Good plans shape good decisions. That's why good planning helps to make elusive dreams come true."

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