|
AD-AS ANALYSIS: An economic model relating the price level and real production that is used to analyze business cycles, gross domestic product, unemployment, inflation, stabilization policies, and related macroeconomic phenomena. The AS-AD model, inspired by the standard market model, captures the interaction between aggregate demand (the buyers) and short-run and long-run aggregate supply (the sellers).
Visit the GLOSS*arama
|
|
|
|
INDETERMINANT: The directional change in a variable, resulting from the disruption of an equilibrium that is identified using comparative statics, is not known. This term is commonly used to indicate that the change in either price or quantity is unknown when the market experiences simultaneous shifts in both the demand and supply curves. For example, an increase in both demand and supply definitely cause an increase in the quantity exchanged. But whether the market price increases or decreases is indeterminant. In some economic models, especially the market model, simultaneous disruptions caused by two or more ceteris paribus factors can generate either known changes or unknown changes in endogenous variables. In those cases where the disruption produces a known change in the direction of the variable (increase or decrease), the change is said to be determinant. In those cases where the disruption does not produce a known change in the direction of a variable (it might increase or it might decrease) the change is said to be indeterminant.Indeterminant ResultsShift | Quantity Change | Price Change | Demand and Supply Increase | Determinant (Increase) | Indeterminant | Demand and Supply Decrease | Determinant (Decrease) | Indeterminant | Demand Increase and Supply Decrease | Indeterminant | Determinant (Increase) | Demand Decrease and Supply Increase | Indeterminant | Determinant (Decrease) | Indeterminant results are most often associated with the market model. The simultaneous change in demand and supply, triggered by changes in a demand determinant and a supply determinant, causes the change in either price or quantity to be indeterminant.The table presented at the right summarizes the indeterminant (and determinant) changes in price and quantity for simultaneous shifts of the demand and supply curves. Need to Know MoreThe reason for an indeterminant price or quantity is that the relative magnitude of the shifts of the two curves is unknown. For most introductory comparative static analyses of the market, the only information known is something like "demand decreases and supply increases." HOW MUCH each curve shifts is not often known! If the relative magnitudes of the two shifts are known, then both price and quantity can be determinant. Moreover, with enough information (such as, demand and supply elasticity coefficients) the exact changes in price and quantity can be calculated. Without such information, however, simultaneous shifts of the demand and supply curves mean either price or quantity is indeterminant.
Recommended Citation:INDETERMINANT, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2024. [Accessed: October 10, 2024]. Check Out These Related Terms... | | | | | | Or For A Little Background... | | | | | | | | | | | | | | | | And For Further Study... | | | | | | | | |
Search Again?
Back to the WEB*pedia
|
|
|
GRAY SKITTERY [What's This?]
Today, you are likely to spend a great deal of time looking for a downtown retail store hoping to buy either an ink cartridge for your printer or a rechargeable battery for your camera. Be on the lookout for broken fingernail clippers. Your Complete Scope
This isn't me! What am I?
|
|
Only 1% of the U.S. population paid income taxes when the income tax was established in 1914.
|
|
"Every generation of Americans needs to know that freedom exists not in doing what we like, but in having the right to do what we ought. " -- Pope John Paul II
|
|
WLLN Weak Law of Large Numbers
|
|
Tell us what you think about AmosWEB. Like what you see? Have suggestions for improvements? Let us know. Click the User Feedback link.
User Feedback
|
|