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B: The common notation for the "slope" term of an equation specified as Y = a + bX. Mathematically, the b-slope term indicates the change in the value of the Y variable resulting from a unit change in the value of the X variable. Theoretically, the b-slope is frequently used to indicate endogenous or dependent relation between the Y and X variables. For example, if Y represents consumption and X represents national income, b measures induced consumption expenditures.
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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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INTEREST RATES, 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. A decrease in interest rates cause an increase (upward shift) of the aggregate expenditures line. An increase in interest rates cause a decrease (downward shift) of the aggregate expenditures line. Other notable aggregate expenditures determinants include consumer confidence, federal deficit, inflationary expectations, and exchange rates.
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GREEN LOGIGUIN
[What's This?]
Today, you are likely to spend a great deal of time at an auction wanting to buy either a coffee cup commemorating the 1960 Presidential election or a how-to book on fixing your computer, with illustrations. Be on the lookout for telephone calls from former employers.
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The wealthy industrialist, Andrew Carnegie, was once removed from a London tram because he lacked the money needed for the fare.
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"Plans are only good intentions unless they immediately degenerate into hard work." -- Peter Drucker, management consultant
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BOJ
Bank of Japan
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