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REAL-BALANCE EFFECT: A change in aggregate expenditures on real production made by the household, business, government, and foreign sectors that results because a change in the price level alters the purchasing power of money. This is one of three effects underlying the negative slope of the aggregate demand curve associated with a movement along the aggregate demand curve and a change in aggregate expenditures. The other two are interest-rate effect and net-export effect.
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Lesson 12: Business Cycles | Unit 3: Measurement
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Page: 14 of 26
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Coincident economic indicators move along with the aggregate economy. They mark the business cycle.- We don't know how the economy is doing until after the fact. Real GDP is released every three months. Coincident indicators are available monthly.
- The four coincident indicators are measures of production, employment, income, and sales.
- The Composite Index of Coincident Indicators, displayed in the graph, combines all four. Turns in this index mark business cycle peaks and troughs.
- Leading and coincident indicators work together. Leading indicators forecast turning points. Coincident indicators turn 3 to 12 months later.
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M1 The narrow-range monetary aggregate for the U.S. economy containing the combination of currency (and coins) issued by government and held by the nonbank public and checkable deposits issued by banking institutions. M1 contains the two items that function as THE medium of exchange for the U.S. economy. M1 is one of three monetary aggregates tracked and reported by the Federal Reserve System. The other two are designated M2 and M3.
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PINK FADFLY
[What's This?]
Today, you are likely to spend a great deal of time at a going out of business sale hoping to buy either a handcrafted bird feeder or a New York Yankees baseball cap. Be on the lookout for the happiest person in the room.
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This isn't me! What am I?
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A U.S. dime has 118 groves around its edge, one fewer than a U.S. quarter.
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"Lord, where we are wrong, make us willing to change; where we are right, make us easy to live with. " -- Peter Marshall, US Senate chaplain
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Y
Income, Nominal Gross National Product
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