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KEYNESIAN MODEL: A macroeconomic model based on the principles of Keynesian economics that is used to identify the equilibrium level of, and analyze disruptions to, aggregate production and income. This model identifies equilibrium aggregate production and income as the intersection of the aggregate expenditures line and the 45-degree line. The Keynesian model comes in three basic variations designated by the number of macroeconomic sectors included--two-sector, three-sector, and four sector. The Keynesian model is also commonly presented in the form of injections and leakages in addition to the standard aggregate expenditures format. This model is used to analyze several important topics and issues, including multipliers, business cycles, fiscal policy, and monetary policy.

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Lesson 8: Market Shocks | Unit 1: Adjustments Page: 2 of 20

Topic: Three Questions <=PAGE BACK | PAGE NEXT=>

There are three basic questions about market changes which we need to ask in this lesson.

Three questions:

  • What causes the market to move? What shocks the market? What disrupts the market from it's existing equilibrium?
  • What are the consequences of the move to the market? What is the price and quantity at the new market equilibrium?
  • Is the market move good or bad? How does the new equilibrium compare with the old? Is the price higher or lower? Is the quantity greater or less? Three Questions

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WHOLESALE PRICE INDEX

An index of the prices paid by retail stores for the products they ultimately resell to consumers. The Wholesale Price Index (WPI) was the forerunner of the modern Producer Price Index (PPI) and was discontinued in 1978. Other noted price indexes used to track economic activity are the Consumer Price Index (CPI) and the GDP price deflator.

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APLS

BLUE PLACIDOLA
[What's This?]

Today, you are likely to spend a great deal of time driving to a factory outlet looking to buy either a flower arrangement in a coffee cup for your father or a how-to book on meeting people. Be on the lookout for bottles of barbeque sauce that act TOO innocent.
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This isn't me! What am I?

The wealthy industrialist, Andrew Carnegie, was once removed from a London tram because he lacked the money needed for the fare.
"It is very rare that you meet with obstacles in this world (that) the humblest man has not the faculties to surmount. "

-- Henry David Thoreau, philosopher

CAPM
Capital Asset Pricing Model
A PEDestrian's Guide
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