Intermediate Macroeconomics ECN3082 L, Mussurov Altay

The most liquid of money definitions and the basis for all other more broadly defined measures of money.

Occurs when the Q of real output D is equal to the Q of real output supplied. Graphically this is at the intersection of AD and AS.

A period of time long enough for input prices to have fully adjusted to market forces. In this period, all product and input markets are in a state of equilibrium and the economy is operating at fe. Once all markets in the economy have adjusted and there exists this long-run equilibrium, the as curve is vertical at GDPR.

A period of time during which the prices of goods and services are changing their respective markets, but the input prices have not yet adjusted to those changes in the product markets. During the sr, the as curve has three stages – horizontal, upward sloping and vertical.

The next unit or increment of an action.

Making decisions based up weighing the marginal benefits and costs of that action.

additional benefit received from the consumption of the next unit of a good or service.

The additional cost incurred from the consumption of the next unit of a good or service.

The philosophy that a citizen should receive a share of economic resources proportional to the marginal revenue product of his or her own productivity.

The change in consumption caused by a change in disposable income, or the slope of the consumption function. MPC = ▲c/▲di.

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.