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RETURNS TO SCALE: Changes in production the occurs when all resources are proportionately increased in the long run. Returns to scale answers the question: If labor, capital, and ALL other inputs increase by 10%, does output increase by more than 10%, less than 10%, or exactly 10%? These answers indicate that returns to scale can take one of three forms: increasing returns to scale, decreasing returns to scale, and constant returns to scale.
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Lesson 13: Aggregate Demand | Unit 2: Doing More
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Page: 8 of 22
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The foreign sector, everyone who is not a citizen of our domestic economy, also purchases domestic production. These are termed net exports. Net exports are exports minus imports. - Exports are purchases of domestic production by the foreign sector.
- Imports are the purchases of foreign production by the domestic sector.
- Net exports gives us an overall picture of how our economy interacts with the foreign sector.
- Calculating net exports by subtracting imports gives us aggregate expenditures on domestic production only.
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ASSUMPTION An initial condition or statement of a model or theory that sets the stage for an analysis by abstracting from the real world. Assumptions are important to economic analysis. Some assumptions are used to simplify a complex analysis into more easily manageable parts. Other assumptions are used as control conditions that are subsequently changed to evaluate the consequences.
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The first "Black Friday" on record, a friday marked by a major financial catastrophe, occurred on September 24, 1869 -- A FRIDAY -- when an attempted cornering of the gold market induced a financial crises and economy-wide depression.
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"When you play, play hard; when you work, don't play at all. " -- Theodore Roosevelt, 26th US president
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EMS
European Monetary System
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