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ENVIRONMENTAL QUALITY: The degree to which the naturally occurring resources of the planet (land, air, and water) are free of artificial impurities or waste products generated by human activity. Pollution is the primary nemesis of environmental quality. As pollution waste residuals are discharged into the environment, environmental quality declines. Like other economic notions, environmental quality is subjective in the sense that it affects the satisfaction of wants and needs.
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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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ELASTIC SUPPLY The general supply relation in which relatively small changes in price cause relatively large changes in quantity supplied. Small changes in price cause relatively large changes in quantity supplied or the percentage change in quantity supplied is larger than the percentage change in price. This characterization of elasticity is most important for the price elasticity of supply. Elastic supply is one of two general elasticity relations for supply. The other is inelastic supply.
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YELLOW CHIPPEROON
[What's This?]
Today, you are likely to spend a great deal of time searching for a specialty store hoping to buy either a rotisserie oven that can also toast bread or a flower arrangement in a coffee cup for your father. Be on the lookout for the last item on a shelf.
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This isn't me! What am I?
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Lewis Carroll, the author of Alice in Wonderland, was the pseudonym of Charles Dodgson, an accomplished mathematician and economist.
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"Man is born to live, not to prepare for life. " -- Boris Pasternak, writer
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CPI-W
Consumer Price Index-Urban Wage Earners and Clerical Workers
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