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WAGES, AGGREGATE SUPPLY DETERMINANT: One of several specific aggregate supply determinants assumed constant when the short-run aggregate supply curve is constructed, and that shifts the short-run aggregate supply curve when it changes. An increase in the wages causes a decrease (leftward shift) of the short-run aggregate supply curve. A decrease in the wages causes an increase (rightward shift) of the short-run aggregate supply curve. Other notable aggregate supply determinants include the technology, energy prices, and the capital stock. Wages are an example of a resource price aggregate supply determinant.
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Lesson 12: Business Cycles | Unit 2: A Simple Cycle
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Page: 9 of 26
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An expansion is a period of increasing aggregate economic activity, indicated by the growth of real GDP from B to C.- Expansions typically last about 2-4 years, but can continue up to a decade.
- The economy generally grows faster than, often surpassing, the long-run trend.
- A recovery is the early part of an expansion.
- As the economy approaches point C, above the long-run trend, inflation is most likely to become a problem, as we try to buy more output than our resources can produce.
- At or above the full-employment, long-run trend line, unemployment is less of a problem.
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PERFECT COMPETITION, LOSS MINIMIZATION A perfectly competitive firm is presumed to produce the quantity of output that minimizes economic losses, if price is greater than average variable cost but less than average total cost. This is one of three short-run production alternatives facing a firm. The other two are profit maximization (if price exceeds average total cost) and shutdown (if price is less than average variable cost).
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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 looking to buy either a T-shirt commemorating the 2000 Olympics or a genuine fake plastic Tiffany lamp. Be on the lookout for mail order catalogs with hidden messages.
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This isn't me! What am I?
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The word "fiscal" is derived from a Latin word meaning "moneybag."
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"The greatest things ever done on Earth have been done little by little. " -- William Jennings Bryan
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RPI
Retail Price Index
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