ECON 103 Study Guide - Final Guide: Comparative Advantage, Gdp Deflator, Nairu
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Consumption a = autonomous consumption. Real interest rate r = interest rate. Slope of ae line: (mpm only exists in an open economy) M = stock of money. Welfare) v m1: transaction monies , or money that can be directly used for transactions. It includes: currency held outside of banks, traveler"s checks, and other checkable deposits. Likely test questions e t a. Q given figure 1: at an interest rate of 4%, firms and households will . A at 4%: will attempt to increase their holding of money by selling bonds. At 6%: are satisfied with the amount of money they are holding. At 10%: will attempt to reduce their holdings of money by buying bonds. If fluctuations in economic activity are caused by shifts in the as curve, then: The aggregate demand curve must be vertical. Q one reason the ad curve slopes downward is that a decrease in price level generate: A a decreased demand for money.
