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SAVING-INVESTMENT EQUALITY: A classical economic proposition stating that flexible prices ensure an equality between saving and investment. This equality is essential to obtain the classical economic conclusion that unrestricted markets achieve and maintain full employment. This is one of the three assumptions underlying classical economics. The other two assumptions are flexible prices and Say's law.
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Lesson 20: Federal Reserve System | Unit 4: Monetary Policy
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Page: 13 of 20
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Topic:
Overview: Graphs
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Expansionary monetary policy increases aggregate demand up to full employment and contractionary monetary policy decreases aggregate demand back to full employment.- Expansionary policy increases the money supply and shifts the AD curve rightward. This is used to correct a recessionary gap and achieve long-run equilibrium.
- Contractionary policy decreases the money supply and shifts the AD curve leftward. This is used to correct an inflationary gap and achieve long-run equilibrium.
- Note that monetary policy and interest rates are closely connected.
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SCARCE A condition in which a given good or resource is limited relative to its desired uses. This is a special condition of the general condition of scarcity. A scarce good or resource is typically exchanged through markets and carries a positive price.
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BLUE PLACIDOLA
[What's This?]
Today, you are likely to spend a great deal of time touring the new suburban shopping complex seeking to buy either a small, foam rubber football or an instructional DVD on learning to the play the oboe. Be on the lookout for vindictive digital clocks with revenge on their minds.
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This isn't me! What am I?
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The Dow Jones family of stock market price indexes began with a simple average of 11 stock prices in 1884.
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"Courage is the ladder on which all the other virtues mount." -- Claire Boothe Luce, diplomat, writer
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ACCR
Annual Cost of Capital Recovery
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