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HIGH-POWERED MONEY: Also termed the monetary base, the total of currency held by the nonbank public, vault cash held by banks, and Federal Reserve deposits of the banks. This contains the monetary components over which the Federal Reserve System has relatively complete control and is often used as a guide for the Fed's money control ability and monetary policy.
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                           PRINCIPLE: A generally accepted, verified, proven, fundamental law of nature. A principle captures a cause-and-effect relation about the workings of the world that has been tested and verified through the scientific method. The law of demand, law of increasing opportunity cost, and law of diminishing marginal utility are three fundamental (and extremely important) economic principles. Principles form the structural foundation of the theories used in economic analysis. As a house is constructed from concrete, lumber, and nails, a theory is constructed from principles. To be a fundamental law of nature, a principle must capture a cause-and-effect relation about the workings of the real world. One example of a fundamental law is something like: If demand price rises, quantity demanded falls. The scientific method is the process of building theories by identifying and verifying these fundamental laws of nature. Verified HypothesisEvery principle begins life as a hypothesis, as a reasonable cause-and-effect statement about the world. A hypothesis becomes a principle, a law of nature, only after it has been systematically and extensively verified with real world data. Professor Grumpinkston, for example, might hypothesize that seating position in a classroom affects learning and the grades earned by students. But such a hypothesis is little more than speculation until it is verified with actual observations--over and over again.A principle, as such, captures a fundamental piece of the machinery that makes up the complex world. It is the gear, the coiled spring, the lever, the switch, that when assembled with other components make the world work. While the ultimate goal of the scientific method is to understand the entire complexity of the world, this task is accomplished one principle at a time. Ceteris ParibusA principle is generally stated in the form of "If A, then B" or alternatively that "A causes B." For example the law of demand can be stated as:If demand price increases, then quantity demanded decreases. Or:A higher demand price causes a smaller quantity demanded. Whichever form is used, a principle isolates the relation between two events, A and B. To isolate the relation it is critical to control other possible influences using the ceteris paribus assumption. Ceteris paribus means other factors are held constant. For the law of demand, other factors such as buyers' income, the prices of other goods, and buyers' preferences are held unchanged.
Recommended Citation:PRINCIPLE, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2023. [Accessed: September 21, 2023].
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BLACK DISMALAPOD
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Today, you are likely to spend a great deal of time lost in your local discount super center wanting to buy either a coffee cup commemorating last Friday (you know why) or a wall poster commemorating the first day of spring. Be on the lookout for the happiest person in the room.
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Okun's Law posits that the unemployment rate increases by 1% for every 2% gap between real GDP and full-employment real GDP.
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"Man is born to live, not to prepare for life. " -- Boris Pasternak, writer
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WTO
World Trade Organization
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