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AGGREGATE EXPENDITURE DETERMINANT: A ceteris paribus factor that affects aggregate expenditures, but which is assumed constant when the aggregate expenditure line is constructed. Changes in any of the aggregate expenditures determinants cause the aggregate expenditure line to shift. While a wide variety of specific ceteris paribus factors can cause the aggregate expenditure line 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 expenditure line. If any determinant affects aggregate expenditures it MUST affect one of these four expenditures.

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Lesson 5: Market Demand | Unit 5: Scarcity Page: 19 of 20

Topic: Unlimited Wants <=PAGE BACK | PAGE NEXT=>

Demand is closely related to the scarcity problem, especially unlimited wants and needs.
  • Scarcity arises because society has limited resources but unlimited wants and needs.
  • The connection between demand and scarcity is:
    • The demand side of the markets comes directly from the unlimited wants and needs side of the scarcity problem, and
    • The supply side of the market comes from the limited resources side of the scarcity problem.

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MONEY CREATION, THE PROCESS

The process in which the banking system creates checkable deposits by lending excess reserves. The total amount of checkable deposits (and money) created by the banking system depends on the amount of excess reserves available and the reserve requirement ratio specifying the reserves needed to back up deposits. The money creation process is the movement of reserves from bank to bank, with each bank using excess reserves to make loans (and checkable deposits), then keeping a fraction of the reserves to back up newly created deposits. The deposit expansion multiplier captures the money creation process, indicating the amount of checkable deposits created if the banking reserve acquires a given amount of excess reserves.

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BLACK DISMALAPOD
[What's This?]

Today, you are likely to spend a great deal of time watching the shopping channel looking to buy either a computer that can play video games and burn DVDs or a black duffle bag with velcro closures. Be on the lookout for gnomes hiding in cypress trees.
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This isn't me! What am I?

The penny is the only coin minted by the U.S. government in which the "face" on the head looks to the right. All others face left.
"It takes generosity to discover the whole through others. If you realize you are only a violin, you can open yourself up to the world by playing your role in the concert. "

-- Jacques Yves Cousteau, marine explorer

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