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Economics
Title: Economics
Category: Law & Government / Government & Politics
Details: Words: 1005 | Pages: 4.3 (approximately 235 words/page)
Economics
Money-commodity money, Fiat. Money supply=currency in hands of public+other assetsas means of payment (demand deposits, traverler's checks, savings accounts, time deposits, mutual funds)
M1=currency in hands of public+traverler's checks+demand deposits+other checkable deposits CU+CD
M2= M1+savings account+small time deposits(Md excess supply of money=excess demand for bonds
If Fed sells Bonds=Ms dec, int rate inc. price of bonds dec. Bank reserves dec.
If money kept …showed first 75 words of 1005 total…
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…showed last 75 words of 1005 total…increased riskiness of stocks
If actual int rate is below equil int rate, Price of bonds will decrease
In Short run purchase of bonds-will lower int rate, increase spending, increase output
If price of oil inc- AS will inc due to decline in wages, returning economy to full employment.
short run decrease in gov't purchases-decrease real GDP because of multiplier effect. declinde will be lessened by decrease in the price level and the interest rate.
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