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APP: The abbreviation of average physical product, which is the quantity of total output produced per unit of a variable input, holding all other inputs fixed. Average physical product, usually abbreviated APP, is found by dividing total physical product by the quantity of the variable input. Average physical product is actually just another name for average product (AP). But don't be confused by the extra term (physical).
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Lesson 15: Aggregate Market | Unit 4: Self Correction
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Page: 16 of 22
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The aggregate market, which is typically at or near short-run equilibrium, is persistently motivated to seek out the long-run equilibrium.- This motivation comes from an imbalance in the labor market created by rigid wages, temporarily tapping into frictional and structural unemployment, and misperceptions about the real wage.
- The imbalance is temporary. The macroeconomy will automatically move toward long-run equilibrium and full employment.
- Wages are flexible in the long run, but rigid in the short run. This is the key to the self-correction mechanism of the aggregate market.
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AVERAGE PROPENSITY TO SAVE The proportion of household income that is used for saving. The average propensity to save (abbreviated APS) is really nothing more than average saving. Together with the average propensity to consume, it indicates how a given level of income is divided between consumption and saving. A related saving measure is the marginal propensity to save.
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Ragnar Frisch and Jan Tinbergen were the 1st Nobel Prize winners in Economics in 1969.
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"Plans are only good intentions unless they immediately degenerate into hard work." -- Peter Drucker, management consultant
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ICSID
International Center for the Settlement of Investment Disputes
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