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L: This has two common uses. One is as the standard abbreviation for the quantity of labor, especially for the analysis of production. The complementary representations for other inputs are "K" for capital and "N" for population. The second is as the broadest monetary aggregate for the U.S. economy tracked by the Federal Reserve System, best thought of as total liquid assets. It was since be discontinued. In it's heyday, it was comprised of everything in M3 plus other liquid assets, including U.S. Treasury bills, commercial paper, and savings bonds. L was typically 15 to percent higher than M3 and seven times as much as M1. The Federal Reserve System discontinued this measurement in 1998.
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Lesson 1: Economic Basics | Unit 3: The Economy
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Page: 8 of 18
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Topic:
A Mixed Economy: Markets and Government
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Markets do an effective (and efficient) job of answering the three questions of allocation--most of the time.- Markets are the VOLUNTARY exchange of goods and services.
- A pure market economy is an economy that uses nothing but markets to allocate resources.
- A pure market economy is a useful theoretical benchmark.
Market responses to the allocation questions:- What? Resources are used to produce goods with the highest prices.
- How? Goods are produced using the combination of resource with the lowest prices.
- For Whom? People with more income buy more goods.
Government also helps answer the three questions of allocation.- Government allocation is INVOLUNTARY. It sets the laws and rules.
- A pure command economy is an economy that uses nothing but government to allocate resources.
- A pure command economy is another useful theoretical benchmark.
Government responses to the allocation questions:- What? When government spends taxes, it dictates what goods will be produced.
- How? Government has laws and rules that specify how resources will be used to produce goods.
- For Whom? Government collects taxes from some people and distributes them among other people.
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LAW OF DEMAND The inverse relationship between demand price and the quantity demanded, assuming ceteris paribus factors are held constant. This fundamental economic principle indicates that a decrease the price of a commodity results in an increase in the quantity of the commodity that buyers are willing and able to purchase in a given period of time, if other factors are held constant. The law of demand is one of the most important principles found in the study of economics.
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PINK FADFLY
[What's This?]
Today, you are likely to spend a great deal of time at a garage sale trying to buy either one of those memory foam pillows or a remote controlled train set. Be on the lookout for small children selling products door-to-door.
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This isn't me! What am I?
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The wealthy industrialist, Andrew Carnegie, was once removed from a London tram because he lacked the money needed for the fare.
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"Sometimes when you innovate, you make mistakes. It is best to admit them quickly and get on with improving your other innovations. " -- Steve Jobs, Apple Computer founder
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MCP
Marginal Cost Pricing
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