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REAL: The value after adjusting for inflation. Pointy-headed economist are frequently interested in comparing stuff (production, income, or whatever) in one year with similar stuff in another year. However, in that inflation can distort such a comparison, it's best made using a fixed set of prices that eliminate inflationary changes. In practice, this is accomplished by using the prices in an arbitrary "base year." Once the price differences have been eliminated, the numbers are said to be measured in real dollars.

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Lesson 15: Aggregate Market | Unit 5: Policy Preview Page: 21 of 22

Topic: Time of Adjustment <=PAGE BACK | PAGE NEXT=>

There is no specific, absolute time period that separates short run from long run.

Time factors:

  • First: The size of the gap between short-run real production and long-run real production. Bigger gaps take longer to close.
  • Second: Because prices are less rigid going up than down, inflationary gaps tend to close more quickly than recessionary gaps.
  • Third: Adjustment speed depends on the underlying structure of the economy, including things like size, government laws, resource endowments, and culture.
These change over time and differ among countries. But adjustment is usually months not days.

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EQUALITY STANDARD

An income distribution standard in which income is divided equally among members of society. This is one of three basic income distribution standards that answers the For Whom? question of allocation. The other two are the contributive standard and the needs standard.

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Today, you are likely to spend a great deal of time driving to a factory outlet trying to buy either a package of blank rewritable CDs or yellow cotton balls. Be on the lookout for fairy dust that tastes like salt.
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Paper money used by the Commonwealth of Massachusetts prior to the U.S. Revolutionary War, which was issued against the dictates of Britain, was designed by patriot and silversmith, Paul Revere.
"Man is born to live, not to prepare for life. "

-- Boris Pasternak, writer

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