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MARGINAL FACTOR COST CURVE: A curve that graphically represents the relation between factor quantity and the marginal factor cost incurred by a firm for buying or hiring a factor of production. Marginal factor cost curve indicates how a firm's total factor cost is affected by hiring one more or one fewer worker. This curve is constructed to capture the relation between marginal factor cost and the factor quantity, holding other variables constant.
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Lesson 15: Aggregate Market | Unit 4: Self Correction
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Page: 17 of 22
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Topic:
Recessionary Gap
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The aggregate market can automatically reach long-run equilibrium by closing a recessionary gap. Key points: - Short-run equilibrium is at the intersection of the AD and the SRAS (SRo) curves.
- The initial short-run price level is Po, and real production is Qo.
- Short-run equilibrium is to the left of the full employment production, Qf.
- We have a recessionary gap.
- As wages fall, production cost decreases which increases short-run aggregate supply.
- The SRAS curves shift to reach the full employment level at the intersection of the LRAS and AD curves.
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CONSUMER CONFIDENCE, AGGREGATE EXPENDITURES DETERMINANT One of several specific aggregate expenditures determinants assumed constant when the aggregate expenditures line is constructed, and that shifts the aggregate expenditures line when it changes. An increase in consumer confidence causes an increase (upward shift) of the aggregate expenditures line. A decrease in consumer confidence causes a decrease (downward shift) of the aggregate expenditures line. Other notable aggregate expenditures determinants include interest rates, federal deficit, inflationary expectations, and exchange rates.
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YELLOW CHIPPEROON
[What's This?]
Today, you are likely to spend a great deal of time at a dollar discount store looking to buy either a remote controlled World War I bi-plane or a wall poster commemorating Thor Heyerdahl's Pacific crossing aboard the Kon-Tiki. Be on the lookout for infected paper cuts.
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In the late 1800s and early 1900s, almost 2 million children were employed as factory workers.
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"Sometimes when you innovate, you make mistakes. It is best to admit them quickly and get on with improving your other innovations. " -- Steve Jobs, Apple Computer founder
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NNP
Net National Product
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