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AGGREGATE MARKET ANALYSIS: An investigation of macroeconomic phenomena, including unemployment, inflation, business cycles, and stabilization policies, using the aggregate market interaction between aggregate demand, short-run aggregate supply, and long-run aggregate supply. Aggregate market analysis, also termed AS-AD analysis, has been the primary method of investigating macroeconomic activity since the 1980s, replacing Keynesian economic analysis that was predominant for several decades. Like most economic analysis, aggregate market analysis employs comparative statics, the technique of comparing the equilibrium after a shock with the equilibrium before a shock. While the aggregate market model is usually presented as a simply graph at the introductory level, more sophisticated and more advanced analyses often involve a system of equations.

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IMPORTS LINE: A graphical depiction of the relation between imports bought from the foreign sector and the domestic economy's aggregate level of income or production. This relation is most important for deriving the net exports line, which plays a minor, but growing role in the study of Keynesian economics. An imports line is characterized by vertical intercept, which indicates autonomous imports, and slope, which is the marginal propensity to import and indicates induced imports. The aggregate expenditures line used in Keynesian economics is derived by adding or stacking the net exports line, derived as the difference between the exports line and imports line, onto the consumption line, after adding investment expenditures and government purchases.

     See also | induced net exports | autonomous net exports | induced imports | autonomous exports | marginal propensity to import | slope, net exports line | intercept, net exports line | consumption line | saving line | investment line | government purchases line | net exports | net exports of goods and services | imports | exports | Keynesian economics | macroeconomics | foreign sector | national income | gross domestic product | induced expenditures | autonomous expenditures | aggregate expenditures | aggregate expenditures line | derivation, consumption line | net exports determinants | Keynesian model | Keynesian equilibrium | injections-leakages model | aggregate demand | paradox of thrift | fiscal policy | multiplier | government functions |


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OPPORTUNITY COST, PRODUCTION POSSIBILITIES

The production possibilities analysis, which is the alternative combinations of two goods that an economy can produce with given resources and technology, can be used to illustrate opportunity cost--the highest valued alternative foregone in the pursuit of an activity.

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