equations mid. 2

Question 1

M1

Answer 1

currency held outside. banks. by. individs and. buisnesses plus. chequeaable depositis

Question 2

m2.

Answer 2

M1 plus all other deposits – non chequable owned by individs and businesses

Question 3

open market purchase

Answer 3

BOC buys secruitites and pays for them with reserves.
increases bank reserves and monetary base

Question 4

open market saale

Answer 4

BOC sells securities. and paid for with reserves
decreases reserves
decreases monetary base

Question 5

quantity of money

Answer 5

sum of currency held by inidiculaas and businesses plus bank deps

Question 6

desired reserve ratio

Answer 6

bank reserves / total deposits

Question 7

excess reserves

Answer 7

=. actual - desired reserves

Question 8

currency drain ratio

Answer 8

= curreny to deposits
= currency by individ and busi / chequable dep x 100

Question 9

money multipler

Answer 9

= (1 + C/d) / (c/d + r/d)
= change in quantiity of money / chnage in mon base

Question 10

M1 multiplier

Answer 10

M1 / monetary base

Question 11

M2 multiplier

Answer 11

M2 / monetary base

Question 12

bank reserve ratio

Answer 12

= (currency held by banks + reserves at central bank) / CHEQUABLE DEP X 100

Question 13

real mmoney

Answer 13

= nominal money / price level

Question 14

demand for money relationship

Answer 14

= b/w quantiity of real money demanded and nominal int rate
- moves along curve
- increase in int rate = up

Question 15

shift demnd for money curve

Answer 15

= L = decrease
= R = increase

Question 16

velocity of circulation

Answer 16

= GDP or PY / quantity of money
PY = price level x real gdp

Question 17

equation of exchange

Answer 17

MV = PY

Question 18

inflation rate

Answer 18

money growth rate + rate of velocity change - Real GDPgrowth

Question 19

exhcnage rate

Answer 19

= 1 / country currency

Question 20

appreciation

Answer 20

rise in exhcnage rate

Question 21

depreciation

Answer 21

decrease in exchnage rate

Question 22

real exchnage rate REF

Answer 22

= (nominal exchnage rate x canadian price) / other country price

Question 23

current accounts balance CAB

Answer 23

= exports -imports + net interest income + net transfers

Question 24

sum of 3 accounts =

Answer 24

0

Question 25

net exports = neg

Answer 25

world supplies funds to the coutnry

Question 26

net exports = pos

Answer 26

country funds the rest of the world

Question 27

debtor nation

Answer 27

= borrowed more than lent

Question 28

creditor nation

Answer 28

= invested more in the world than invested in

Question 29

government sector

Answer 29

net taxes - gov expend

Question 30

private sector

Answer 30

savings - investment

Question 31

aggregate supply

Answer 31

relationship between quantity of real GDP supplied and the price level

Question 32

change in potential gdp

Answer 32

= moves LAS and SAS curves rightward

Question 33

chnage in money wage rate

Answer 33

= supply decreseas and shifts left LAS dos not chnage

Question 34

quantity of real gdp demanded

Answer 34

y = c+i+g+x-m

Question 35

aggregate demand

Answer 35

relationship between quanitty of real GDP demanded and the price level

Question 36

change in price level, quantity of real GDP demanded

Answer 36

… moves along the curve

Question 37

AD curve slops down because ..

Answer 37

1. wealth effect
2. substitution effects

Question 38

short run equilibrium

Answer 38

quantity real gdp demanded = supplied

Question 39

real gdp above equilibrium

Answer 39

= move down SAS to equilib.

Question 40

real gdp below equilibrium

Answer 40

= move up on SAS to equilib

Question 41

above full employment equilib

Answer 41

= real gdp > potnetial

Question 42

full employment equilib

Answer 42

= real gdp = potential

Question 43

below full employment equilib

Answer 43

= potential. > real gdp

Question 44

inflationary gap

Answer 44

real gdp > potential

Question 45

no output gap =

Answer 45

potnetila = real

Question 46

recessionary gap

Answer 46

= potnetial > real gdp