Refers to the case where the average level of prices is decreasing through time. Deflation implies negative inflation rates
A deflationary gap is present if equilibrium (actual) real output falls short of the level corresponding to the full employment level of output as a result of insufficient aggregate demand.
the quantity of goods and services that consumers are willing, and able to buy at each possible price (over a given period of time)
Demand deficient unemployment
Refer to Cyclical unemployment
Demand pull inflation
Inflation resulting from aggregate demand rising (faster than aggregate supply).
Demand side policies
Policies aimed at influencing the level of aggregate demand in order to affect growth, employment and inflation. They include fiscal and monetary policy.
Consumption of such goods creates very significant negative externalities on society so governments try to decrease or prohibit their consumption. Typical examples include alcohol, tobacco and illegal drugs.
Depreciation (of a currency)
A decrease in the exchange rate within a floating (flexible) exchange rate system.
Devaluation (of a currency)
A decrease in the exchange rate within a fixed exchange rate system.
Products which are similar but not identical across sellers in an industry. They are considered by consumers as close but not perfect substitutes.
taxes (paid to the government) on income (households and firms)
When a firm enjoys economies of scale, leading to faster rates of innovation (new products and new processes).