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FIFTH RULE OF IMPERFECTION: The fifth of seven basic rules of the economy. It is the observation that the real world is not perfect. This means markets often fail to achieve efficiency because of several failings. This also means that government seldom enacts the policies needed to correct market failings. We are usually faced with the lesser of evils.
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Lesson 9: Consumer Demand | Unit 5: Taking Stock
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Page: 20 of 22
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- One point of interest on the horizon is the law of demand.
- Recall that...
- The law of demand states that an inverse relation exists between demand price and the quantity demanded, ceteris paribus.
- The portion of this definition that is most important to the theory of consumer demand is the demand price.
- Definitionally speaking,
- Demand price is the maximum price that buyers would be willing and able to pay for a given quantity of a good.
- The law of diminishing marginal utility is the guiding principle of consumer demand theory.
- It captures the relation between marginal utility and quantity.
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OPEN MARKET OPERATIONS The buying and selling of U.S. Treasury securities by the Federal Reserve System (the Fed) as a means of a controlling the money supply. An increase in the money supply is achieved when the Fed buys securities. A decrease in the money supply is achieved when the Fed sells securities. The Federal Open Market Committee is the specific component of the Federal Reserve System that is charged with open market operations. Open market operations are the most important of the three monetary policy tools that the Fed can use, in principle, to control the money supply. The other two are the discount rate and reserve requirements.
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BLUE PLACIDOLA
[What's This?]
Today, you are likely to spend a great deal of time strolling around a discount warehouse buying club looking to buy either a wall poster commemorating Thor Heyerdahl's Pacific crossing aboard the Kon-Tiki or decorative garden figurines. 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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The New York Stock Exchange was established by a group of investors in New York City in 1817 under a buttonwood tree at the end of a little road named Wall Street.
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"Defeat is simply a signal to press onward. " -- Helen Keller, author, lecturer
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LOCH
London Options Clearing House
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