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SELF-CORRECTION, INFLATIONARY GAP: The automatic process through which the aggregate market achieves long-run equilibrium by eliminating an inflationary gap created by short-run equilibrium. With an inflationary gap short-run equilibrium real production is greater than full-employment real production, meaning resource markets have shortages, and in particular labor is overemployed. Self-correction is the process in which these temporary imbalances are eliminated through flexible prices as the aggregate market achieves long-run equilibrium. The key to this process is shifts of the short-run aggregate supply curve caused by changes in wages and other resource prices. The long-run result is lower wages and a decrease in short-run aggregate supply.

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CONTRACTION: A phase of the business cycle characterized by a general period of declining economic activity. A contraction is one of two basic business cycle phases. The other is expansion. The transition from contraction to expansion is termed a trough and the transition from expansion to contraction is termed a peak. The popular term for contraction, one that frequent shows up in the media, is recession. Should you check out the entry recession, you will see information that is essentially identical to that presented here, because they are two terms for the same phenomenon.

     See also | business cycle | recession | expansion | peak | trough | recovery | real gross domestic product | unemployment rate | unemployment | full employment | inflation | aggregate expenditures | National Income and Product Accounts | Great Depression |


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CONTRACTION, AmosWEB GLOSS*arama, http://www.AmosWEB.com, AmosWEB LLC, 2000-2020. [Accessed: February 22, 2020].


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BANK LIABILITIES

What a bank owes, including most notably customer deposits. Bank liabilities are typically listed on the right-hand side of a bank's balance sheet. Bank assets, what a bank owns, are listed on the left-hand side of a bank's balance sheet. Net worth is the difference between assets and liabilities. The most important liability category of most bank is checkable deposits, which is part of the economy's M1 money supply. The largest liability category includes other types of deposits (especially savings deposits, certificates of deposit, and money market deposits) that enter into the M2 and M3 monetary aggregates.

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Today, you are likely to spend a great deal of time waiting for visits from door-to-door solicitors seeking to buy either a 50 foot extension cord or a combination CD player, clock radio, and telephone (with answering machine). Be on the lookout for florescent light bulbs that hum folk songs from the sixties.
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In the late 1800s and early 1900s, almost 2 million children were employed as factory workers.
"Be willing to have it so. Acceptance of what has happened is the first step to overcoming the consequences of any misfortune."

-- William James, Psychologist

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