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16 Cards in this Set
- Front
- Back
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Personal Consumption Expenditures
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Durable Good + NonDurable Goods + Services
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Marginal Propensity to Consume (MPC)
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Incremental Consumption/Incremental DPI
where: DPI=Disposable Personal Income |
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Marginal Propensity to Save (MPS)
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Incremental Saving/Incremental DPI
where: DPI=Disposable Personal Income |
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Gross Investment
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Dross Private Domestic Investment + Net Foreign Investment
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National Income Accounts Identity
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Actual Gross Investment = Actual Gross Savings
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Financing of Investment
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I=S + (M-X)+(T-G)
Savings (S) + Borrowing from World (M-X) + Government Savings (T-G) |
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Keynesian Tax Multiplier
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MPC / (1 – MPC)
or MPC / MPS where: MPC=Marginal Propensity to Consume MPS= Marginal Propensity to Save |
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Keynesian Expenditure Multiplier
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1 / (1 – MPC)
or 1 / MPS where: MPC=Marginal Propensity to Consume MPS= Marginal Propensity to Save |
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Adjusted Money Supply Multiplier
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(1 + CD) / (RR + CD)
where: CD=Currency Drain RR=Reserve Requirement |
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Classical Quantity Theory of Exchange
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PQ = MV
Key idea, V/Q remains relatively constant, thus: P = M * [V/Q] |
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Modern Quantity Theory of Money
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MV = PQ, but V and P remain relatively stable in the short-term.
Key implication: Short-term, INCREASE in M→INCREASE Q. Longer term, INCREASE in M→INCREASE inflation. |
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Potential Money Supply Multiplier
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1/RR
where: RR=Legal Reserve Requirement |
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Taylor Rule Equation
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FFR=[2+Inf*] + .5[Inf* - 2] + [.05 * Inflation Gap]
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Unemployment Rate (Formula)
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#Unemployed/Labor Force * 100
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Consumer Price Index (CPI) (Formula)
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[(Basket @ Current Prices)/(Basket @ Base Prices)] * 100
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Inflation Rate (IR)
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(Current CPI - Last CPI)/Last CPI
where: CPI=Consumer Price Index |
