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RECESSIONARY GAP: The difference between the equilibrium real production achieved in the short-run aggregate market and full-employment real production the occurs when short-run equilibrium real production is less than full-employment real production. A recessionary gap, also termed a contractionary gap, is associated with a business-cycle contraction. This is one of two alternative output gaps that can occur when short-run production differs from full employment. The other is an inflationary 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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BEIGE MUNDORTLE
[What's This?]
Today, you are likely to spend a great deal of time at a going out of business sale trying to buy either galvanized steel storage shelves or a large green chalkboard shaped like the state of Maine. Be on the lookout for door-to-door salesmen.
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In the Middle Ages, pepper was used for bartering, and it was often more valuable and stable in value than gold.
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"There is no passion to be found playing small ‚ in settling for a life that idles than the one you are capable of living." -- Nelson Mandela
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QJE
Quarterly Journal of Economics
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