Search results
Results from the WOW.Com Content Network
Monetary-disequilibrium is a short-run phenomenon as it contains within itself the process by which a new equilibrium is established i.e. through changes in the price level. If the demand for real balances changes, either the nominal money supply or price level can adjust to monetary equilibrium in the long run as seen from the figure. [3]
If the value of the excess demand function is positive, then more units of a commodity are being demanded than can be supplied; there is a shortage. If excess demand is negative, then more units are being supplied than are demanded; there is a glut. The assumption is that the rate of change of prices will be proportional to excess demand, so ...
Likewise, if GDP persists below natural GDP, inflation might decelerate as suppliers lower prices in order to sell more products, utilizing their excess production-capacity. Potential output in macroeconomics corresponds to one point on the production–possibility curve for a society as a whole, reflecting its natural, technological, and ...
In microeconomics, excess demand, also known as shortage, is a phenomenon where the demand for goods and services exceeds that which the firms can produce.. In microeconomics, an excess demand function is a function expressing excess demand for a product—the excess of quantity demanded over quantity supplied—in terms of the product's price and possibly other determinants. [1]
Furthermore, if an economy as a whole, as characterized by an aggregate excess demand function, has the revealed preference property (which is a much stronger condition than revealed preferences for a single individual) or the gross substitute property then likewise the equilibrium will be unique. All methods of establishing uniqueness can be ...
The shift of a demand curve takes place when there is a change in any non-price determinant of demand, resulting in a new demand curve. [11] Non-price determinants of demand are those things that will cause demand to change even if prices remain the same—in other words, the things whose changes might cause a consumer to buy more or less of a ...
The quarter of the labor force that was unemployed constituted a supply of labor for which the demand predicted by Say's law did not exist. John Maynard Keynes argued in 1936 that Say's law is simply not true, and that demand, rather than supply, is the key variable that determines the overall level of economic activity.
Walras's law is a consequence of finite budgets. If a consumer spends more on good A then they must spend and therefore demand less of good B, reducing B's price. The sum of the values of excess demands across all markets must equal zero, whether or not the economy is in a general equilibrium.