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ADJUSTMENT, SHORT-RUN AGGREGATE MARKET: Disequilibrium in the short-run aggregate market induces changes in the price level that restore equilibrium. If the price level is above the short-run equilibrium price level, economy-wide product market surpluses cause the price level to fall. If the price level is below the short-run equilibrium price level, economy-wide product market shortages cause the price level to rise. In both cases short-run equilibrium is restored. You might want to compare adjustment, long-run aggregate market. Price level changes induce changes in both aggregate expenditures and real production. Unlike the long-run aggregate market, changes in the price level can induce changes in short-run aggregate supply, making it greater or less than full-employment real production.
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Lesson 12: Business Cycles | Unit 3: Measurement
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Page: 15 of 26
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Lagging economic indicators lag the turning points of business cycles by 3 to 12 months.- Lagging indicators 'seal the deal' by certifying that a contraction or an expansion is over.
- The next turning point usually doesn't begin until lagging indicators confirm that the last one has happened.
- Seven statistics are used as lagging indicators, including in the inflation rate, consumer debt, and the prime interest rate.
- The Composite Index of Lagging Indicators, displayed in this graph, combines all seven into a single number. This index turns after the official business cycle.
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MARGINAL UTILITY The additional utility obtained from the consumption or use of an additional unit of a good. It is specified as the change in total utility divided by the change in quantity. Marginal utility indicates what each additional unit of a good is worth to a consumer and provides a theoretical basis for understanding market demand and the law of demand. Marginal utility generally declines with increased consumption of a good, a reflection of the law of diminishing marginal utility.
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Approximately three-fourths of the U.S. paper currency in circular contains traces of cocaine.
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"Man is born to live, not to prepare for life. " -- Boris Pasternak, writer
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MPI
Marginal Propensity to Invest
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