Class Notes (1,100,000)
CA (620,000)
Ryerson (30,000)
ECN (1,000)
Lecture 1

ECN 600 Lecture Notes - Lecture 1: Nominal Interest Rate, Real Interest Rate, Open Market Operation


Department
Economics
Course Code
ECN 600
Professor
Leo Michelis
Lecture
1

This preview shows pages 1-3. to view the full 9 pages of the document.

Components of Expenditure
!""#"$%
!&'"()*+,-"&.-"#"&%/,/"%ԐԐ(,-
!0",
!0 "1 (,
Autonomous Spending 0!'"&.-"#"&%/,/"%Ԑ+Ԑ
01    1)0+(12 )+
30!)+4
01     1(1 
30!)%Ԑ+455 !Ԑ Ԑ Ԑ'Ԑ)/+3 41 Ԑ
Autonomous Spending and the real interest rate (r) 0!&'""#")%/,/"%ԐԐ'/+-.)"%ԐԐ+
01  )+   1()
"%ԐԐ+
o$ ( 6/7
The Investment-Saving (IS) Curve
6 2/ 2/#8
 2
92
o:2/ 2/  1
 . 1
2/#8
o; 9 2
0!&'""#")%/,/"%ԐԐ'/+-.)"%ԐԐ+
0'! /  1 
o0!&'""#")%/,/"%ԐԐ'/+-
o0!0'.)"%ԐԐ+
;#8   1)0+2()*+
o,!0'.)"%ԐԐ+
*.

Only pages 1-3 are available for preview. Some parts have been intentionally blurred.

o11,!&'""#")%/,/
"%ԐԐ' /
+-)"%ԐԐ+
*.)()*.+.(+
< =/2
o2/#8/  =
1     2 /#81  
12    26 #8
= 7
   /2 >1? 26/
2? 1 /6/,
!&'""#")%/,/
"%ԐԐ' /
+-)"%ԐԐ+
*.)()*.+.(+
@!
1C y
(
1– t
)
y
(
I r +XԐԐr
)
!
1MPE
(
I r+XԐԐ r
)
9  2 /6)*A*+
   112   1(1
 
 6/2  2/  16 
6
1 (/   < 6/2
Changes in the Interest Rate
1  <2/#8?
(:/1 
o1 ( )+
o   62(/2 )+
o   62(/1) +.1  62(/ Ԑ
)%Ԑ+
2112
/( 22
o#8B
C2  
C9 6
C(?#8?6/

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/( 2
oB#8
C2 /
C9 6
C(?#8?6
<12
: /12 (D 6/2
o < 1  6 /2
o12/12  1  6/2
2112
1  2(12.1
2/111#8.
 12/111#8
11 ;
E:/   1:6 .(1 1
12 / 
FE:/( 12 
o  /: 2  
o  ?   ?: 9(1((
:
 ((  )   +
o    /
FE:/  12
o  /: 2  
o  ?   ?: 9(1 ((
:
(1(( 1  )   +
o /   
The Demand for Money
F//( G ? //
    7
H2? ( 
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