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KEYNESIAN ECONOMICS: A school of thought developed by John Maynard Keynes built on the proposition that aggregate demand is the primary source of business cycle instability, especially recessions. The basic structure of Keynesian economics was initially presented in Keynes' book The General Theory of Employment, Interest, and Money, published in 1936. For the next forty years, the Keynesian school dominated the economics discipline and reached a pinnacle as a guide for federal government policy in the 1960s. It fell out of favor in the 1970s and 1980s, as monetarism, neoclassical economics, supply-side economics, and rational expectations became more widely accepted, but it still has a strong following in the academic and policy-making arenas.
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Lesson 8: Market Shocks | Unit 3: Single Shifts
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Page: 11 of 20
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The six steps for a decrease in supply:- A determinant changes. Sellers expect higher prices.
- A curve to shifts. The supply curve for hot fudge sundaes shifts leftward.
- A shortage or a surplus occurs. The decrease in supply causes a shortage of hot fudge sundaes.
- The price changes. The price of hot fudge sundaes goes up.
- The quantities demanded and supplied change. The quantity supplied for hot fudge sundaes increases while their quantity demand is reduced.
- The market imbalance is eliminated and equilibrium is restored. The shortage of hot fudge sundaes is eliminated. The price is higher and the quantity exchanged is less.
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PERFECT COMPETITION, SHORT-RUN SUPPLY CURVE A perfectly competitive firm's supply curve is that portion of its marginal cost curve that lies above the minimum of the average variable cost curve. A perfectly competitive firm maximizes profit by producing the quantity of output that equates price and marginal cost. As such, the firm moves along its positively-sloped marginal cost curve in response to changing prices.
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WHITE GULLIBON
[What's This?]
Today, you are likely to spend a great deal of time browsing about a thrift store hoping to buy either a toaster oven that has convection cooking or a birthday gift for your mother. Be on the lookout for pencil sharpeners with an attitude.
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This isn't me! What am I?
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On a typical day, the United States Mint produces over $1 million worth of dimes.
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"When I stand before God at the end of my life, I would hope that I would not have a single bit of talent left, and could say, „I used everything you gave me.¾" -- Erma Bombeck, writer
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IIA
Irrelevance of Independent Alternatives
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