![]() aggregate demand The total of the components of spending in the economy, added to get GDP: Y = C + I + G + X – M. See also: incomplete contract, moral hazard, asymmetric information. Also referred to as the ‘hidden attributes’ problem (the state of already being ill is the hidden attribute), to distinguish it from the ‘hidden actions’ problem of moral hazard. This will lead to further price increases to cover costs. An example is the problem of asymmetric information in insurance: if the price is sufficiently high, the only people who will seek to purchase medical insurance are people who know they are ill (but the insurer does not). adverse selection The problem faced by parties to an exchange in which the terms offered by one party will cause some exchange partners to drop out. ![]() administratively feasible Policies for which the government has sufficient information and staff for implementation. adjustment gap The lag between some outside change in labour market conditions and the movement of the economy to the neighbourhood of the new equilibrium. acyclical No tendency to move either in the same or opposite direction to aggregate output and employment over the business cycle. accountability The obligation of a decision-maker (or body) to be responsive to the needs and wishes of people affected by his, her or its decisions. absolute advantage A person or country has this in the production of a good if the inputs it uses to produce this good are less than in some other person or country. abatement policy A policy designed to reduce environmental damages. Glossary abatement Practices to limit or reverse environmental damages.
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