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KEYNESIAN AGGREGATE SUPPLY CURVE: A modification of the standard aggregate supply curve used in the aggregate market (or AD-AD) analysis to reflect the basic assumptions of Keynesian economics. The Keynesian aggregate supply curve contains either two or three segments. The strict Keynesian aggregate supply curve contains two segments, a vertical classical range and a horizontal Keynesian range, meeting a right angle and forming a reverse L-shape. An alternative version replaces the right angle intersection with a gradual transition between the two segments that is positively sloped and termed the intermediate range. The modern aggregate supply curve is largely based on this intermediate range.
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Lesson 18: Banking | Unit 4: Regulating Banks
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Page: 18 of 24
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Banking is a heavily regulated industry. Reasons: - First: Banks have the temptation to go for large profits at the expense of protecting deposits.
- Second: The economy's health rests with having the 'correct' money supply.
The problems: - Banks get carried away seeking profits without having enough deposit-protecting reserves.
- Customers can't withdraw deposits and lose trust.
- Banks shut down, remaining bank deposits become worthless, and the money supply shrinks.
- The economy heads into a recession.
Important points: - A failed bank is bad for the economy.
- Government can control the checking account part of money only by controlling and regulating banks.
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TOTAL REVENUE CURVE A curve that graphically represents the relation between the total revenue received by a firm for selling its output and the quantity of output sold. It is combined with a firm's total cost curve to determine economic profit and the profit maximizing level of production. The slope of the total revenue curve is marginal revenue. The total revenue curve for a firm with no market control is a straight line. The total revenue curve for a firm with market control is "hump-shaped."
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Post WWI induced hyperinflation in German in the early 1900s raised prices by 726 million times from 1918 to 1923.
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"Follow effective action with quiet reflection. From the quiet reflection will come even more effective action. " -- Peter F. Drucker, author
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IER
International Economic Review
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