key things to remember Flashcards
1
Q
MPC formula
A
change in consumption / change in disposable income/GDP on graph
(using slope)
chap 11
2
Q
what does it mean when inventories decrease, and what happens to real GDP?
A
inventories decrease when firms sell more than they are producing, so they use up their inventory and sell it. real GDP increases
chap 11
3
Q
multipler formula (3 ways)
A
1 / (1 - slope of AE curve)
change in Y / change in A (autonomous expenditure)
if no income taxes & no imports:
1 / (1 - MPC) or 1 / (MPS)
4
Q
velocity of circulation formula
A
V = PY / M
5
Q
equation of exchange formula
A
MV = PY
6
Q
what is monetary base made up of
A
reserves + currency in circulation
7
Q
money multiplier formula
A
(1 + C/D) / (C/D + R/D)
