The most liquid of money definitions and the basis for all other more broadly defined measures of money.

Occurs when the Q of real output D is equal to the Q of real output supplied. Graphically this is at the intersection of AD and AS.

A period of time long enough for input prices to have fully adjusted to market forces. In this period, all product and input markets are in a state of equilibrium and the economy is operating at fe. Once all markets in the economy have adjusted and there exists this long-run equilibrium, the as curve is vertical at GDPR.

A period of time during which the prices of goods and services are changing their respective markets, but the input prices have not yet adjusted to those changes in the product markets. During the sr, the as curve has three stages – horizontal, upward sloping and vertical.

The next unit or increment of an action.

Making decisions based up weighing the marginal benefits and costs of that action.

additional benefit received from the consumption of the next unit of a good or service.

The additional cost incurred from the consumption of the next unit of a good or service.

The philosophy that a citizen should receive a share of economic resources proportional to the marginal revenue product of his or her own productivity.

The change in consumption caused by a change in disposable income, or the slope of the consumption function. MPC = ▲c/▲di.