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Definition of Equilibrium
A position in which there is no pressure for change, where demand and supply are equal.
The slope of the capital market line (CML). Since the CML represents the
The interest rate that clears the market. Also called the market-clearing interest
The absence of equilibrium. Disequilibrium implies excess demand or excess supply and pressure for change.
In general the hypothesis states that all relevant information is fully and
The equilibrium price for futures contracts. Also called the theoretical futures price, which equals
Total demand for loans by borrowers equals total supply of loans from lenders. The market,
The notion that the ratio between domestic and foreign price levels should equal
Line representing the relationship between expected return and market risk.
Also called the fair price, the equilibrium futures price.
A model for estimating equilibrium rates of return and values of
A graph illustrating the equilibrium relationship between the
Combinations of the price level and income for which the goods and services market is in equilibrium, or for which both the goods and services market and the money market are in equilibrium.
Combinations of price level and income for which the labor market is in equilibrium. The short-run aggregate supply curve incorporates information and price/wage inflexibilities in the labor market, whereas the long-run aggregate supply curve does not.
A line representing equilibrium in the goods and services market, on a diagram with aggregate demand on the vertical axis and aggregate supply on the horizontal axis.
Change in the equilibrium value of a variable of interest per change in a variable over which one has control. "The" multiplier is the change in equilibrium income per change in government spending.
Natural Rate of Unemployment (NRU)
The level of unemployment characterizing the economy in long-run equilibrium, determined by the levels of frictional, structural, and institutionally induced unemployment. At this rate of unemployment, inflation should be constant, so it is sometimes called the nonaccelerating inflation rate of unemployment, or NAIRU.
Efficient Markets Hypothesis
The hypothesis that securities are typically in equilibrium--that they are fairly priced in the sense that the price reflects all publicly available information on the security.
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