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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.

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Lesson Contents
Unit 1: Adjustments
  • Overview
  • Three Questions
  • Unit 1 Summary
  • Unit 2: Determinants
  • Shifts
  • Demand
  • Supply
  • Unit 2 Summary
  • Unit 3: Single Shifts
  • More Demand
  • Less Demand
  • More Supply
  • Less Supply
  • Unit 3 Summary
  • Unit 4: Double Shifts
  • More Demand and More Supply
  • More Demand and Less Supply
  • Less Demand and Less Supply
  • Less Demand and More Supply
  • Unit 4 Summary
  • Unit 5: Cause and Effect
  • Economic Science
  • Link Sequence
  • Unit 5 Summary
  • Course Home
    Market Shocks

    Our goal in this lesson is to investigate disruptions of the market. Specifically, we want to use the market model previously developed, to examine the why and how of market shocks. What causes market shocks? How do markets react when shocked? If the truth be known, markets in the real world don't remain at the same locations for very long. They move. They adjust. Prices change. Quantities change. We can understand these real world market changes, by analyzing what happens to market model when it's shocked.

    • The first unit, Adjustments, lays the foundation for analyzing market shocks with an overview of the adjustment process and the role played by the ceteris paribus assumption.
    • In the second unit, Determinants, we review the five determinants of demand and five determinants of supply that cause market disruptions.
    • We then move into the actual adjustment process in the third unit, Single Shifts, examining four disruptions that involve a shift in either the demand or supply curve.
    • The fourth unit, Double Shifts, builds on these four basic shifts to exam four complex shocks that have simultaneous shifts in both the demand and supply curves.
    • We end this lesson in the fifth unit, Cause and Effect, by relating market shocks to the fundamental notion of cause and effect inherent in the study of economic science.

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    OTHER PRICES, SUPPLY DETERMINANT

    The prices of other goods that influence the decision to sell a particular good, which are assumed constant when a supply curve is constructed. Other prices can be for goods that are either substitutes-in-production or complements-in-production. This is one of five supply determinants that shift the supply curve when they change. The other four are resource prices, production technology, sellers' expectations, and number of sellers.

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    BEIGE MUNDORTLE
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    Today, you are likely to spend a great deal of time driving to a factory outlet looking to buy either a green and yellow striped sweater vest or a Boston Red Sox baseball cap. Be on the lookout for the last item on a shelf.
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    Cyrus McCormick not only invented the reaper for harvesting grain, he also invented the installment payment for selling his reaper.
    "The secret of getting ahead is getting started. The secret of getting started is breaking your complex, overwhelming tasks into small manageable tasks, and then starting on the first one. "

    -- Mark Twain, writer

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