About MRU | Marginal Revolution University (2024)

FAQs

When there is a positive technology shock to the economy, ____________________ in the long-run? ›

A positive shock shifts the long-run aggregate supply curve to the right, which increases growth and reduces the inflation rate.

Marginal Revolution may refer to: the development of economic theory in the late 19th century which explained economic behavior in terms of marginal utility and related concepts: Marginal utility § Marginal Revolution.

The short-run aggregate supply curve is upward sloping while the long-run aggregate supply curve is vertical. The SRAS is upward sloping because of the misperceptions theory, the sticky wages theory, and the sticky prices theory.

Economics is the study of scarcity and its implications for the use of resources, production of goods and services, growth of production and welfare over time, and a great variety of other complex issues of vital concern to society.

E-commerce and targeted marketing have had the biggest impact on the world economy. The ability for a business on one side of the world to be able to sell a product to someone on the other side of the world with little extra cost would be unthinkable not too long ago.

Consider the three types of economic shocks: financial shocks, spending shocks, and supply shocks.

The "Marginal Revolution," a well-known event in the history of economic thought, challenged the mainstream classical political economy and introduced new methods to economic study. The "Marginal Revolution" marked the rise of the Marginal Utility School and pushed the formulation of neoclassical economics.

Marginal Revolution. Marginalism as a formal theory can be attributed to the work of three economists, Jevons in England, Menger in Austria, and Walras in Switzerland. William Stanley Jevons first proposed the theory in articles in 1863 and 1871. Similarly, Carl Menger presented the theory in 1871.

The Industrial Revolution transformed economies that had been based on agriculture and handicrafts into economies based on large-scale industry, mechanized manufacturing, and the factory system. New machines, new power sources, and new ways of organizing work made existing industries more productive and efficient.

Generally, the nominal demand for money increases with the level of nominal output (price level times real output) and decreases with the nominal interest rate. The real demand for money is defined as the nominal amount of money demanded divided by the price level.

What is the misperception theory? ›

According to the misperceptions theory, an unexpected fall in the price level leads suppliers to mistakenly believe that their relative prices have fallen, which induces them to reduce production.

Factors that shift the long-run aggregate supply include labor changes, capital changes, natural resources, and technology changes.

Adam Smith is known as the father of economics for his pioneering ideas in the field of free gross domestic product and free trade. Also see: What is microeconomics?

Yes, that's true in one sense—you do not need an extremely high IQ to understand economics. On the other hand, the quantity of information required to understand economics is vastly larger than the quantity of information needed to understand modern physics. It's a far more complex field, despite being much “easier”.

Positive demand shocks increase aggregate demand in the economy, leading to increased consumption. Companies anticipating increased revenues may respond by hiring more workers or expanding operations. This increase in hiring and economic activity leads to further consumption.

Advances in digital technologies hold considerable potential to lift the trajectory of productivity and economic growth, and to create new and better jobs to replace old ones. As much as two-thirds of potential productivity growth in major economies over the next decade could be related to the new digital technologies.

Technologies like artificial intelligence (AI) and robots have not only sped up and simplified processes but have also made businesses more efficient and cut costs. When businesses use these new technologies, they often see a rise in productivity, which helps the economy grow as a whole.

For example, a positive technology shock increases the marginal productivity of both capital and labor. Other things equal, such a shock would increase firms' demand for labor and capital.