
AGGREGATE EXPENDITURE EQUATION: An equation indicating that aggregate expenditures (AE) are the sum of consumption expenditures (C), investment expenditures (I), government purchases (G), and net exports (XM), stated as: AE = C + I + G + (XM). This equation surfaces in the Keynesian economic incomeexpenditure model in the form of the aggregate expenditures line. However, it's also central throughout the study of macroeconomics, including aggregate demand and the measurement of gross domestic product.
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ELASTICITY: The relative response of one variable to changes in another variable. The phrase "relative response" is best interpreted as the percentage change. For example, the price elasticity of demand, one of the more important applications of this concept in economics, is the percentage change in quantity demanded measured against the percentage change in price. Other notable economic elasticities are the price elasticity of supply, income elasticity of demand, and cross elasticity of demand. See also  elastic  inelastic  relatively inelastic  perfectly inelastic  relatively elastic  unit elastic  perfectly elastic  price elasticity of demand  price elasticity of supply  income elasticity of demand  cross elasticity of demand  elastic demand  inelastic demand  inelastic supply  elastic supply  elasticity determinants  elasticity and demand slope  elasticity alternatives  coefficient of elasticity  midpoint formula  arc elasticity  point elasticity  Recommended Citation:ELASTICITY, AmosWEB GLOSS*arama, http://www.AmosWEB.com, AmosWEB LLC, 20002018. [Accessed: August 20, 2018]. AmosWEB Encyclonomic WEB*pedia:Additional information on this term can be found at: WEB*pedia: elasticity
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DECREASING RETURNS TO SCALE A given proportional change in all resources in the long run results in a proportional smaller change in production. Decreasing returns to scale exists if a firm increases ALL resourceslabor, capital, and other inputsby a given proportion (say 10 percent) and output increases by less than this proportion (that is, less than 10 percent). This is one of three returns to scale. The other two are increasing returns to scale and constant returns to scale.
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