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TERM LIMITS: A policy designed in part to address the public sector efficiency created by re-election seeking political leaders by limiting the amount of time politicians can hold elected office ONLY. Once the limit has been reached, the politician can serve no more... in that particular office. The goal of term limits is to prevent political leaders from spending excessive effort seeking re-election and pursuing policies that appease only the special interest groups that might ensure re-election. The U.S. Presidency has had term limits in place for decades and a number of state and local offices also operate with term limits. Unfortunately term limit restrict voter choices. Perhaps the current office holder actually is the best person for the job and the one preferred by the voters. This matters not. Someone else will be elected. In addition, placing term limits on one office doesn't prevent the politician from seeking election to another office, and in so doing, curry the favor of the same special interest groups.
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                           FINANCIAL WEALTH, AGGREGATE EXPENDITURES DETERMINANT: One of several specific aggregate expenditures determinants assumed constant when the aggregate expenditures line is constructed, and that shifts the aggregate expenditures line when it changes. An increase in financial wealth causes an increase (upward shift) of the aggregate expenditures line. A decrease in financial wealth causes a decrease (downward shift) of the aggregate expenditures line. Other notable aggregate expenditures determinants include consumer confidence, federal deficit, inflationary expectations, and exchange rates. The wealth of the economy comes in two basic forms--physical wealth and financial wealth. Financial wealth includes money, bank accounts, stock certificates, bonds, and other financial instruments that provide direct or indirect claims on physical goods. Physical wealth consists of houses, cars, buildings, land, property, equipment, furniture, appliances, and the whole array of tangible goods.The key with financial wealth is that it can be used to acquire physical wealth. In financial lingo, financial wealth tends to be liquid, it can easily flow between assets. Corporate stock, government savings bonds, and money market bank accounts can all easily flow into money. This money can then flow into, or be used to buy, corporate stock, government savings bonds, and money market bank accounts. Or, more importantly for this present discussion, this financial wealth can flow into, or be used to buy, physical wealth, including houses, cars, buildings, land, property, equipment, furniture, appliances, and the whole array of tangible goods. That is, the financial wealth can be used for aggregate expenditures, especially consumption expenditures and investment expenditures. Changes in financial wealth, as such, tend to cause consumption expenditures and investment expenditures to change in the same direction. - If the household sector and business sector have more financial wealth, then they have the ability to buy more goods.
- If the household sector and business sector have less financial wealth, then they do not have the ability to buy as many goods.
A change in the financial wealth, by changing consumption expenditures and investment expenditures, causes changes in aggregate expenditures. A boost in financial wealth increases aggregate expenditures and causes an upward shift of the aggregate expenditures line. A drop in financial wealth then decreases aggregate expenditures and causes a downward shift of the aggregate expenditures line.What It Does| Financial Wealth | 
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The exhibit to the right presents a standard Keynesian aggregate expenditures line. Like all aggregate expenditures lines, this one is constructed based on several ceteris paribus aggregate expenditures determinants, such as financial wealth. They key question is: What happens to this aggregate expenditures line if financial wealth changes?More Financial WealthSuppose, for example, that the stock market has been rising steadily for several years. This means that the value of corporate stock has risen, providing shareholders with an increase in financial wealth. These shareholders could simply hold onto their more valuable financial wealth, or they could "cash it in," using the money to purchase physical assets. The result is that this increase in financial wealth causes an increase in consumption expenditures and probably investment expenditures and subsequently an increase aggregate expenditures.To see how an increase in financial wealth affects the aggregate expenditures line, click the [More Wealth] button. The increase in financial wealth triggers an increase in aggregate expenditures, which is a upward shift of the aggregate expenditures line. Less financial WealthAlternatively, suppose that the stock market has been falling steadily for several years. This means that the value of corporate stock has fallen, causing the financial wealth of shareholders to decline. Because these shareholders now have less financial wealth, they are less able to purchase physical assets. In fact, some might be forced to sell off existing physical assets if they borrowed the funds used to purchase their corporate stock. The result is that the decrease in financial wealth causes a decrease in expenditures and probably investment expenditures and subsequently a decrease aggregate expenditures.To see how a decrease in financial wealth affects the aggregate expenditures line, click the [Less Wealth] button. The decrease in financial wealth triggers a decrease in aggregate expenditures, which is a downward shift of the aggregate expenditures line. What Does It Mean?Changes in financial wealth come about for two key reasons:- Monetary Policy: An important component of financial wealth is money. The total supply of money in the economy is controlled through monetary policy by the Federal Reserve System for the expressed purpose of addressing the problems of business-cycle instability. A key to this monetary policy control is that financial wealth affects aggregate expenditures. Expansionary monetary policy increases the money supply, which adds to financial wealth and consequently increases aggregate expenditures. Contractionary monetary policy decreases the money supply, which reduces financial wealth and consequently decreases aggregate expenditures.
- Stock Market: The stock market, and related financial markets, are the primary source of financial wealth for the economy. When stock prices rise, then the financial wealth of stock holders also increases. The result is an increase in aggregate expenditures. Alternatively, when stock prices fall, financial wealth also decreases, and so too do aggregate expenditures.
Recommended Citation:FINANCIAL WEALTH, AGGREGATE EXPENDITURES DETERMINANT, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2025. [Accessed: July 18, 2025].
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RED AGGRESSERINE
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Today, you are likely to spend a great deal of time at a flea market wanting to buy either a weathervane with a cow on top or a box of multi-colored, plastic paper clips. Be on the lookout for telephone calls from long-lost relatives.
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One of the largest markets for gold in the United States is the manufacturing of class rings.
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"A winner is someone who recognizes his God-given talents, works his tail off to develop them into skills, and uses those skills to accomplish his goals. " -- Larry Bird, basketball player
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Multilateral Trade Negotiations
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