Notes on "Equilibrium"
The total amount of goods and services demanded in an
economy at a specific point in time and at a prevailing price level.
Short-run aggregate supply is assumed to maintain the positive price and
quantity correlation; more can be produced through increased resource
utilization, technological improvements or other factors. SRAS is an upward
Long-run aggregate supply is assumed to be constant in the long-run as
in the long-run resources are assumed to be used optimally, leaving no potential
for increasing capacity. LRAS is a vertical curve.
An aggregate index value that provides an indication of the increase
in prices from one period to another; used to evaluate inflation across periods.
Real Gross Domestic Product: Gross Domestic Product (the sum of the
final value of goods and services produced over a specific time interval and
within a country’s national borders.) calculated across time periods using a
constant price level.
Measured as a percentage rate of the number of individuals that
would like to work and are an active part of the labor force to the number of
individuals that comprise the active labor force. Unemployment may be
categorized as frictional, structural and cyclical components.
The business cycle period that coincides with the lowest GDP for a given
point in time.
The business cycle period that coincides with the maximum obtainable
GDP for a given point in time.