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RECESSIONARY GAP: The difference between the equilibrium real production achieved in the short-run aggregate market and full-employment real production the occurs when short-run equilibrium real production is less than full-employment real production. A recessionary gap, also termed a contractionary gap, is associated with a business-cycle contraction. This is one of two alternative output gaps that can occur when short-run production differs from full employment. The other is an inflationary gap.
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Lesson 8: Market Shocks | Unit 4: Double Shifts
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Page: 15 of 20
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Topic:
Less Demand and Less Supply
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Here we have demand decreasing (tastes change) and supply decreasing (number of sellers declines).- A decrease in demand causes a decrease in both price and quantity.
- A decrease supply causes price to increase and quantity to decrease.
- The combined effect is an obvious decrease in quantity but a questionable change in price.
- At the new equilibrium the price is indeterminant.
- If both demand and supply curve shift in the same direction, then quantity also changes in that direction, but price is indeterminant.
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AVERAGE REVENUE PRODUCT AND MARGINAL REVENUE PRODUCT A mathematical connection between average revenue product and marginal revenue product stating that the change in the average revenue product depends on a comparison between the average revenue product and marginal revenue product. If marginal revenue product is less than average revenue product, then average revenue product declines. If marginal revenue product is greater than average revenue product, then average revenue product rises. If marginal revenue product is equal to average revenue product, then average revenue product does not change.
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BEIGE MUNDORTLE
[What's This?]
Today, you are likely to spend a great deal of time searching for rummage sales seeking to buy either an instructional DVD on learning to the play the oboe or a small, foam rubber football. Be on the lookout for celebrities who speak directly to you through your television.
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This isn't me! What am I?
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General Electric is the only stock from the original 1896 Dow Jones Industrial Average remaining in the current index.
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"The road to success is always under construction. " -- Lily Tomlin, Actress
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ACT
Advance Corporation Tax
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