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INFLATIONARY GAP, KEYNESIAN MODEL: The difference between equilibrium aggregate production achieved in the Keynesian model and full-employment aggregate production that occurs when equilibrium aggregate production is greater than full-employment aggregate production. An inflationary gap, also termed an expansionary gap, is associated with a business-cycle expansion. The prescribed Keynesian remedy for an inflationary gap is contractionary fiscal policy. This is one of two alternative output gaps that can occur when equilibrium generates production that differs from full employment. The other is a recessionary gap.
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MONEY CREATION The process in which banks increase the amount of funds in checkable deposits (and thus the M1 money supply) by using reserves to make loans. Money creation is made possible through fractional-reserve banking. Because banks keep only a fraction of deposits as reserves, extra reserves can be used to back up and create additional checkable deposits (money) that did not previously exist. Government policy makers (the Federal Reserve System) rely on the money creation process when conducting monetary policy. Money creation by banks is a modern alternative to printing paper currency.
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GRAY SKITTERY
[What's This?]
Today, you are likely to spend a great deal of time watching the shopping channel looking to buy either a rechargeable flashlight or storage boxes for your computer software CDs. Be on the lookout for high interest rates.
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In his older years, Andrew Carnegie seldom carried money because he was offended by its sight and touch.
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"It had long since come to my attention that people of accomplishment rarely sat back and let things happen to them. They went out and happened to things. " -- Elinor Smith, aviator
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MRP
Marginal Revenue Product
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