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MARGINAL EFFICIENCY OF INVESTMENT: The anticipated rate of return on a capital investment project undertaken by a business firm. Businesses typically compare the marginal efficiency of investment, abbreviated MEI, on physical capital with interest rate returns on financial capital when deciding to undertake an investment project. Because different investment projects have different returns, businesses often have a range of alternatives projects from which to choose. Combining all projects throughout the economy gives rise to an investment demand curve relating investment expenditures to the interest rate.
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PHYSICAL WEALTH, AGGREGATE DEMAND DETERMINANT One of several specific aggregate demand determinants assumed constant when the aggregate demand curve is constructed, and that shifts the aggregate demand curve when it changes. An increase in the physical wealth causes a decrease (leftward shift) of the aggregate curve. A decrease in the physical wealth causes an increase (rightward shift) of the aggregate curve. Other notable aggregate demand determinants include interest rates, federal deficit, inflationary expectations, and the money supply.
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RED AGGRESSERINE
[What's This?]
Today, you are likely to spend a great deal of time strolling through a department store seeking to buy either a replacement washer for your kitchen faucet or a stretchable, flexible watch band. Be on the lookout for malfunctioning pocket calculators.
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This isn't me! What am I?
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John Maynard Keynes was born the same year Karl Marx died.
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"It is very rare that you meet with obstacles in this world (that) the humblest man has not the faculties to surmount. " -- Henry David Thoreau, philosopher
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AS-AD
Aggregate Supply-Aggregate Demand Model
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