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Consumption is an affine function of income, C = a + bY where the slope coefficient b is called the marginal propensity to consume. If any of the components of aggregate demand, a, I p or G rises, for a given level of income, Y, the aggregate demand curve shifts up and the intersection of the AD curve with the 45-degree line shifts right ...
The Keynesian cross diagram includes an identity line to show states in which aggregate demand equals output. In a 2-dimensional Cartesian coordinate system, with x representing the abscissa and y the ordinate, the identity line [1] [2] or line of equality [3] is the y = x line. The line, sometimes called the 1:1 line, has a slope of 1. [4]
Also called resource cost advantage. The ability of a party (whether an individual, firm, or country) to produce a greater quantity of a good, product, or service than competitors using the same amount of resources. absorption The total demand for all final marketed goods and services by all economic agents resident in an economy, regardless of the origin of the goods and services themselves ...
Just before his death in 1946, Keynes told Henry Clay, a professor of social economics and advisor to the Bank of England, [67] of his hopes that Adam Smith's "invisible hand" could help Britain out of the economic hole it was in: "I find myself more and more relying for a solution of our problems on the invisible hand which I tried to eject ...
Economists have come up with many ideas to answer the above question. The one which currently dominates the academic literature on real business cycle theory [ citation needed ] was introduced by Finn E. Kydland and Edward C. Prescott in their 1982 work Time to Build And Aggregate Fluctuations .
If two X's exchange for a single Y, then Octavio's and Abby's transaction will take them to some point along the solid grey line, which is known as a budget line. (To be more precise, a budget line may be defined as a straight line through the endowment point representing allocations obtainable by exchange at a certain price.)
April 4 marks the 50th anniversary of the assassination of one of world history’s great leaders.From 1957 to 1968, Dr. Martin Luther King Jr. traveled 6 million miles, gave over 2,500 speeches ...
The consumer will maximise their utility at the kink point in the highest indifference curve that intersects the budget line where x = y. [3] This is intuition, as the consumer is rational there is no point the consumer consuming more of one good and not the other good as their utility is taken at the minimum of the two ( they have no gain in ...