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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 8: Market Shocks | Unit 5: Cause and Effect
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Page: 18 of 20
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Topic:
Economic Science
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Economic analysis lets us examine market shocks in a systematic manner.- Many things affect the market. Prices and quantities can fall or raise for many different reasons.
- Ceteris paribus lets us isolate particular changes in the demand and supply determinants to analyze how price and quantity are affected.
- This market-shock analysis lets us isolate the basic cause and effect principles of economic science.
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COINCIDENT ECONOMIC INDICATORS Four economic statistics that tend to move up or down along WITH business-cycle expansions and contractions. Most importantly, these measures indicate peak and trough turning points when they actually occur. Coincident economic indicators are one of three groups of economic measures used to track business-cycle activity. The other two are leading economic indicators and lagging economic indicators.
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GREEN LOGIGUIN
[What's This?]
Today, you are likely to spend a great deal of time at a going out of business sale looking to buy either a coffee cup commemorating the first day of spring or a printer that works with your stockpile of ink cartridges. Be on the lookout for slow moving vehicles with darkened windows.
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Much of the $15 million used by the United States to finance the Louisiana Purchase from France was borrowed from European banks.
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"Lord, where we are wrong, make us willing to change; where we are right, make us easy to live with. " -- Peter Marshall, US Senate chaplain
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ACV
Actual Cash Value
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