Abu Yahya's definitions
*noun*; in Keynesian economics, the rate at which aggregate consumption rises in response to a rise in national income.
For example, suppose the marginal propensity to consume (MPC) is 0.95. If the national income is 100 billion dollars, and it rises 10%, then consumption will rise by 9.5 billion, and saving will rise by 0.5 billion.
If this theory is correct, then an expanding economy will suffer insufficient demand for its own output, and a recession will be inevitable.
This is why national governments respond to recessions with deficit spending: they are trying to counteract the MPC's effect on aggregate demand, and bring it in line with potential output.
For example, suppose the marginal propensity to consume (MPC) is 0.95. If the national income is 100 billion dollars, and it rises 10%, then consumption will rise by 9.5 billion, and saving will rise by 0.5 billion.
If this theory is correct, then an expanding economy will suffer insufficient demand for its own output, and a recession will be inevitable.
This is why national governments respond to recessions with deficit spending: they are trying to counteract the MPC's effect on aggregate demand, and bring it in line with potential output.
Not only is the marginal propensity to consume weaker in a wealthy community, but, owing to its accumulation of capital being already larger, the opportunities for further investment are less attractive...
J.M. Keynes, *The General Theory of Employment, Interest, and Money* (1936), Ch.3
J.M. Keynes, *The General Theory of Employment, Interest, and Money* (1936), Ch.3
by Abu Yahya March 3, 2009
Get the marginal propensity to consume mug. *noun*; term coined by Adam Smith (1723-1790) to refer to things used to produce other things. Usually people refer to four factors of production:
1.labor (not the same thing as workers); a worker can work more or less hours per week, and can exchange her labor for payment
2. capital; includes tools, machinery, plants and fixtures, seed corn, etc. Adam Smith distinguished between inventories, which he called circulating capital, and tools, which he called fixed capital;
3. land; understood as a specific area on the earth's surface, but sometimes incorporates the natural productivity or mineral resources as well;
4. entrepreneurship; sometimes lumped with capital. Includes the combination of skills required to start a business.
1.labor (not the same thing as workers); a worker can work more or less hours per week, and can exchange her labor for payment
2. capital; includes tools, machinery, plants and fixtures, seed corn, etc. Adam Smith distinguished between inventories, which he called circulating capital, and tools, which he called fixed capital;
3. land; understood as a specific area on the earth's surface, but sometimes incorporates the natural productivity or mineral resources as well;
4. entrepreneurship; sometimes lumped with capital. Includes the combination of skills required to start a business.
Different economic systems vary in their view of who should own the factors of production. In capitalism, this would be private individuals; in communism, it would be a collective. In the Marxist transition to communism, it would be the state.
by Abu Yahya March 3, 2009
Get the factors of productionmug. (MATHEMATICS) each positive number has another number that, when multiplied times itself, equals that number. So, for example, 4 has a square root of 2 (2 x 2 = 4).
The square root of a negative number is an imaginary number. Imaginary numbers are not, by themselves, useful solutions to math problems; but they can be used to find them.
The square root of a negative number is an imaginary number. Imaginary numbers are not, by themselves, useful solutions to math problems; but they can be used to find them.
BILL: Anna, we have a rectangle that's 3 x as long as it is wide, and it encloses an area of 300 square meters. What are the dimensions?
ANNA: Well, that's like 3 squares of 100 square meters. The square root of 100 is 10, so the rectangle is 10 by 30.
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The logarithm of a square root is one half the log of the number itself; hence, the natural log of 25 is 3.2189, while the natural log of 5 is 1.6094.
ANNA: Well, that's like 3 squares of 100 square meters. The square root of 100 is 10, so the rectangle is 10 by 30.
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The logarithm of a square root is one half the log of the number itself; hence, the natural log of 25 is 3.2189, while the natural log of 5 is 1.6094.
by Abu Yahya April 23, 2010
Get the square rootmug. (ECONOMICS) method of transferring wealth from a buyer to a seller, usually over long distances and under different currency systems. Requires the buyer to have an account with a banker in the other city; the buyer sends a note ordering his banker to credit the seller's account by the amount being paid.
Bills of exchange were adopted in 13th century Italy; almost as soon as they became common, traders began to use them as a speculative instrument (discounting bad ones and reselling them) or else as a sleazy method of borrowing money (by "drawing and redrawing," i.e., where two merchants in different towns agree to exchange bills of exchange with each other). "Drawing and redrawing" is analogous to the method used by college students on the 1980's of writing checks to each other every couple of days and depositing them in ATM's so their checking accounts wouldn't bounce.
Bills of exchange were adopted in 13th century Italy; almost as soon as they became common, traders began to use them as a speculative instrument (discounting bad ones and reselling them) or else as a sleazy method of borrowing money (by "drawing and redrawing," i.e., where two merchants in different towns agree to exchange bills of exchange with each other). "Drawing and redrawing" is analogous to the method used by college students on the 1980's of writing checks to each other every couple of days and depositing them in ATM's so their checking accounts wouldn't bounce.
A bill of exchange is a type of "negotiable instrument" (contractual form of money).
A modern form of bill would be a check.
A modern form of bill would be a check.
by Abu Yahya September 7, 2010
Get the bill of exchangemug. In order of population, the Lusophonic countries are Brazil, Mozambique, Angola, Portugal, Guinea-Bissau, Timor-Leste, Macau S.A.R., and São Tomé e Príncipe.
by Abu Yahya May 18, 2010
Get the Lusophonicmug. *noun*, term used in economics to refer to the New Classical economics. The fresh water school was lead by Robert E. Lucas, Thomas J. Sargent, and Robert Barro; its position was that fiscal policy and monetary policy are doomed to be ineffective, since they rely on "fooling the public."
Instead, they argued that even tax cuts had no stimulus effect (in contrast to "supply side economics"), and of course they were resolutely opposed to government spending. Instead, the fresh water school maintained that a recession was caused by markets adjusting to a technology shock to create a structurally different economic system. The best thing to do was to allow the markets to restructure industry on their own.
The fresh water school was known for their support of the "rational expectations hypothesis" (REH) and "real business cycle" (RBC) theory.
Instead, they argued that even tax cuts had no stimulus effect (in contrast to "supply side economics"), and of course they were resolutely opposed to government spending. Instead, the fresh water school maintained that a recession was caused by markets adjusting to a technology shock to create a structurally different economic system. The best thing to do was to allow the markets to restructure industry on their own.
The fresh water school was known for their support of the "rational expectations hypothesis" (REH) and "real business cycle" (RBC) theory.
But lately, a ...school of skeptics who think the Government usually just gums things up is gaining attention and influence. The skeptics are known as the "fresh water school," less for the purity of their thought than for their origins at universities along the shores of the Great Lakes.
"'Fresh Water' Economists Gain," *New York Times*, 23 July 1988
"'Fresh Water' Economists Gain," *New York Times*, 23 July 1988
by Abu Yahya March 5, 2009
Get the fresh water schoolmug. Latin, "where is the benefit?" A type of logical fallacy in which one claims one didn't do something bad because it was not in one's interests to do so. An example would be, "Why would I steal from the cash register? It's going to hurt the business if I do, and then I might lose my job."
The argument is usually used on behalf of someone else: for example, Ludo Martens (1995) argues that Stalin could not possibly have massacred millions of Russians because he needed them to fight WW2; Fogel & Engermann claimed* that American slavery was not very bad because it was in the best interests of slaveowners to have content slaves.
The argument is a fallacy because it assumes that all relevant motives of the actor are well-established, and lead away from the act. It does not account for motives like personal hatred, shame, fear, spite, ideology, and so on.
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* In *Time on the Cross* (1971); the book was conclusively debunked by David & Stampp, *Reckoning with Slavery* (1976).
The argument is usually used on behalf of someone else: for example, Ludo Martens (1995) argues that Stalin could not possibly have massacred millions of Russians because he needed them to fight WW2; Fogel & Engermann claimed* that American slavery was not very bad because it was in the best interests of slaveowners to have content slaves.
The argument is a fallacy because it assumes that all relevant motives of the actor are well-established, and lead away from the act. It does not account for motives like personal hatred, shame, fear, spite, ideology, and so on.
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* In *Time on the Cross* (1971); the book was conclusively debunked by David & Stampp, *Reckoning with Slavery* (1976).
One frequently encounters *quis est beneficium?* arguments among Holocaust deniers of all stripes. Among such worthies it is claimed that Hitler/Stalin/Enver Pasha could not possibly have wanted to massacre all those millions because it was a nuisance to try.
by Abu Yahya February 14, 2009
Get the quis est beneficiummug.