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MARKET ADJUSTMENT: The economic analysis of the changes in market equilibrium caused by changes in the demand determinants and supply determinants. Given the two curves that comprise the market--the demand curve and the supply curve; each of which can increase or decrease; market adjustment comes in eight varieties. Four involve a shift of EITHER the demand curve OR the supply curve. The other four involve a shift of BOTH the demand curve AND the supply curve.
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Lesson 16: Aggregate Shocks | Unit 4: Complex Shifts
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Page: 19 of 21
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- How the self-correction mechanism moves the aggregate market from short-run equilibrium to long-run equilibrium.
- That the analysis of the shifts of the AD and SRAS curves are only the start of a process that becomes more complex when we include self-correcting shifts of the SRAS.
- The two adjustment stages triggered by shifts of the AD curve. First, the shift of the AD curve. Second, the self-correcting shift of the SRAS curve.
- The two adjustment stages triggered by shifts of the SRAS curve. First, the shift of the SRAS curve. Second, the self-correcting shift of the SRAS curve that returns the aggregate market back to it's original position.
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RECOVERY The early phase of a business-cycle expansion that occurs shortly after a contraction has ended. During a recovery, the unemployment rate remains relatively high, but is beginning to fall, and real gross domestic product begins to increase, usually rapidly. However, because the contraction remains fresh in the minds of many, it may not be immediately clear that the trough of the contraction has actually ended.
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PURPLE SMARPHIN
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Today, you are likely to spend a great deal of time at a crowded estate auction hoping to buy either a T-shirt commemorating yesterday or a pair of handcrafted oven mitts. Be on the lookout for fairy dust that tastes like salt.
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Before 1933, the U.S. dime was legal as payment only in transactions of $10 or less.
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"Concentrate all your thoughts upon the work at hand. The sun's rays do not burn until brought to a focus." -- Alexander Graham Bell, inventor
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