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AGGREGATE DEMAND DETERMINANTS: An assortment of ceteris paribus factors that affect aggregate demand, but which are assumed constant when the aggregate demand curve is constructed. Changes in any of the aggregate demand determinants cause the aggregate demand curve to shift. While a wide variety of specific ceteris paribus factors can cause the aggregate demand curve to shift, it's usually most convenient to group them into the four, broad expenditure categories -- consumption, investment, government purchases, and net exports. The reason is that changes in these expenditures are the direct cause of shifts in the aggregate demand curve. If any determinant affects aggregate demand it MUST affect one of these four expenditures.

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Lesson 3: Scarcity | Unit 2: Resources Page: 4 of 17

Topic: Factors <=PAGE BACK | PAGE NEXT=>

Factors of production, productive factors, or resources are the 'stuff' used to create wants-and-needs-satisfying goods.

Economists have four official groups, or categories, for our resources, for our factors of production:

  • Labor: human effort, both physical and mental.
  • Capital: machines, equipment, tools, and buildings.
  • Land: raw materials or natural resources.
  • Entrepreneurship: risk-taking organizers of production.

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AUCTION

A formal market exchange in which prospective buyers make bids to purchase a commodity. An auction is an effective way of exchanging commodities by bringing together buyers and sellers. Auctions are commonly used to exchange financial instruments, agricultural commodities, personal assets, and works of art. Three notable types of auctions are English, Dutch, and sealed-bid.

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Today, you are likely to spend a great deal of time surfing the Internet seeking to buy either a how-to book on fixing your computer, with illustrations or several magazines on computer software. Be on the lookout for defective microphones.
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