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AD CURVE: The aggregate demand curve, which is a graphical representation of the relation between aggregate expenditures on real production and the price level, holding all ceteris paribus aggregate demand determinants constant. The aggregate demand, or AD, curve is one side of the graphical presentation of the aggregate market. The other side is occupied by the aggregate supply curve (which is actually two curves, the long-run aggregate supply curve and the short-run aggregate supply curve). The negative slope of the aggregate demand curve captures the inverse relation between aggregate expenditures on real production and the price level. This negative slope is attributable to the interest-rate effect, real-balance effect, and net-export effect.
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Lesson 13: The Firm | Unit 2: Objectives
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Page: 11 of 24
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In this unit, you should have learned about:- Why business firms, like consumers, are primarily motivated to stay alive.
- Three different types of profit -- economic, accounting, and normal.
- Why business firms are guided by profit maximization much like consumers are guided by utility maximization.
- How and why real world firms are likely to pursue sales maximization, owner utility, employee utility, or social responsibility.
- Natural selection as the proposition indicating that firms which maximize profit, whether intentional or not, are the ones that tend to remain in business.
- Why natural selection justifies the assumption of profit maximization.
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FEDERAL DEFICIT, AGGREGATE DEMAND DETERMINANT One of several specific aggregate demand determinants assumed constant when the aggregate demand curve is constructed, and that shifts the aggregate demand curve when it changes. An increase in the federal deficit causes an increase (rightward shift) of the aggregate curve. A decrease in the federal deficit causes a decrease (leftward shift) of the aggregate curve. Other notable aggregate demand determinants are interest rates, inflationary expectations, and the money supply.
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Sixty percent of big-firm executives said the cover letter is as important or more important than the resume itself when you're looking for a new job
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"Never let the fear of striking out get in your way. " -- Babe Ruth
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FGLS
Feasible Generalized Least Squares
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