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DEMAND-MANAGEMENT POLICIES: Government policies designed to stabilize the economy by changing aggregate demand. The most noted demand-management policies are fiscal and monetary.

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Lesson 13: Aggregate Demand | Unit 2: Doing More Page: 9 of 22

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  • The four expenditures that make up aggregate demand: consumption, investment, government purchases, and net export expenditures.
  • How consumption expenditures are made by households on services, durable goods, and nondurable goods.
  • How investment expenditures are made by businesses on inventories, equipment, and fixed structures.
  • How only government purchases of final goods and services qualify as expenditures for aggregate demand.
  • Net exports, which are exports minus imports. Net exports represent the net expenditures of the foreign sector on our domestically produced final goods and services.

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EFFICIENT

The state of resource allocation that exists when the highest level of consumer satisfaction is achieved from available resources. This state can be accomplished through markets when the price buyers are willing and able to pay for a good--based on the satisfaction obtained--is equal to the price sellers need to charge for a good--based on the opportunity cost of production.

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Today, you are likely to spend a great deal of time browsing through a long list of dot com websites hoping to buy either a pair of red goulashes with shiny buckles or a handcrafted bird feeder. Be on the lookout for defective microphones.
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The earliest known use of paper currency was about 1270 in China during the rule of Kubla Khan.
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RAND Journal of Economics
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