Intermediate Macroeconomics ECN3082 L, Mussurov Altay

The change in saving caused by a change in disposable income, or the slope of the saving function. MPS = ▲s/▲di

The rate paid on the last dollar earned. This is found by taking the ratio of the change in taxes divided by the change in income.

A collection of goods and services used to represent what is consumed in the economy.

An economic system based upon the fundamentals of private property, freedom, self-interest, and prices.

The market for dollars that are available to be borrowed for investment projects. Equilibrium in this market is determined at the real interest rate where the dollars saved (supply) is equal to the dollars borrowed (demand).

The D for money is the sum of money demanded for transactions and money demanded as an asset. It is inversely related to i%.

This measures the maximum amount of new checking deposits that can be created by a single dollar of excess reserves.

quantity of money in circulation as measured by the fed reserve asm1, m2 and m3.

Exists when the production of a good imposes disutility (the spillover costs) upon third parties not directly involved in the consumption or production of this good.

A rising interest rate increases foreign demand for u.s. dollars. The dollar then appreciates in value, causing net exports from the u.s. to fall. Falling net exports decreases ad, which lessens the impact of the expansionary fiscal policy.