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X-INEFFICIENCY: Cost that is higher than it needs to be because a firm is operating inefficiently. This is most often seen for firms that have a great deal of market control, especially monopoly. The lack of competition allows a business to pad it's expenses, hire unneeded employees (like relatives), goof off instead of working, and all sorts of other things that lessen production and increase cost. The business is not penalized for these actions, because market control allows the company to extract whatever price is needed to cover cost.
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Lesson 13: Aggregate Demand | Unit 5: Policies Plus
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Page: 21 of 22
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The federal government can exert a great deal of control over the aggregate demand curve through government policies. This control of aggregate demand is called demand-management policies.- Government use of purchases and taxes to affect aggregate demand is termed fiscal policy.
- Government can influence aggregate demand directly through government purchases.
- Government can also indirectly alter aggregate demand through taxes that affect household consumption and business investment.
- Government also changes the interest rate through monetary policy with the goal of affecting consumption and investment.
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MARGINAL PROPENSITY TO INVEST The change in business investment expenditures induced by a change in income or production (national income or gross domestic product). The marginal propensity to invest (abbreviated MPI) is another term for the slope of the investment line and is calculated as the change in investment divided by the change in income or production. The MPI plays a role in Keynesian economics. It augments the slope of the aggregate expenditures line and is part to the multiplier process. A related marginal measure is the marginal propensity to consume.
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RED AGGRESSERINE
[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 galvanized steel storage shelves or a large green chalkboard shaped like the state of Maine. Be on the lookout for neighborhood pets, especially belligerent parrots.
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Francis Bacon (1561-1626), a champion of the scientific method, died when he caught a severe cold while attempting to preserve a chicken by filling it with snow.
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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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LME
London Metal Exchange
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