Note_card-10.docx - Biren Patel Basic Macroeconomics Note...

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Biren Patel Basic Macroeconomics Note Cards – 10 1. Draw Hill Investment Cube 2. Keynesian Demand for Money - Transactions Demand - Precautionary Demand - Speculative Demand 3. Transactions money Transactions Demand and money is the demand for money to meet daily needs. Examples of this type demand are food, housing, cars, etc. Low risk, High liquidity and Low yield. 4. Precautionary money Precautionary demand for money is the money needed for the for a rainy day. Examples of this type of demand are saving to cover periods of unemployment and sickness. Moderate risk, Moderate liquidity and Moderate yield. 5. Speculative money Speculative Demand for money is the money needed to make money. If the money is lost it will not affect the person's lifestyle. High risk and Varies liquidity and High yield 6. Fiscal policy inflation actions and deflation actions Inflation - Ct + I + G + (X - N) > GNP - Determine you have an inflation. - Aggregate demand must decrease.
- Ct decrease, Ynet decrease, Yg constant, taxes increase I decrease, Total Revenue constant, total cost increase, Taxes increase G decrease Deflation - Determine you have a deflation - Aggregate demand must increase - Ct increase, Ynet increase, Yg constant, taxes decrease I increase, Total Revenue constant, total cost decrease, Taxes decrease G increase 7. Monetary policy inflation and deflation actions Inflation - Ct + I + G + (X - N) > GNP - Determine you have an inflation. - Aggregate demand must decrease. - Ct decrease, Cs constant, Cnd constant, Cd decrease, interest rate increase I decrease, Total Revenue constant, total cost increase, interest rate increase G decrease Deflation - Determine you have a deflation - Aggregate demand must increase - Ct increase, Cs constant, Cnd constant, Cd increase, interest rate decrease I increase, Total Revenue constant, total cost decrease, interest rate decrease G increase 8. Advantages, disadvantages and fact of a partnership Advantages - Easy to organize - Better expertise - Share the losses - Better financing Disadvantages - Unlimited liability - Limited expertise - Limited financing - Lacks continuity - Share the profits
9. Advantages and disadvantages and fact of a corporation Advantages - Limited liability - Better financing - Better expertise - Continuity - Share the losses Disadvantages - Share the profits - Harder to organize - Proxy fights

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