Macroeconomics

Efficiency-wage theories:

Theories of real-wage

rigidity and unemployment according to which

firms raise labor productivity and profits by keeping

real wages above the equilibrium level.

Efficient markets hypothesis:

The theory that

asset prices reflect all publicly available information

about the value of an asset.

Elasticity:

The percentage change in a variable

caused by a 1-percent change in another variable.

Endogenous growth theory:

Models of eco-

nomic growth that try to explain the rate of techno-

logical change.

Endogenous variable:

A variable that is explained by

a particular model; a variable whose value is determined

by the model’s solution. (Cf. exogenous variable.)

Equilibrium:

A state of balance between opposing

forces, such as the balance of supply and demand in a

market.