midterm 3 equations - Actual = natural – ½ x output gap...

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Opportunity cost: OCx (∆Y/∆X) Real money supply = M/P Real purchasing power = nominal income/price level x (base yr price level) Annual inflation tax = (y2 pp – y1 pp)/y1 pp x base yr Pp1 – pp2 Real seignorage = (rt of money growth)(real MS) (∆M/M)(M/P) Okun’s law : cyclical unemployment = -½ x output gap
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Unformatted text preview: Actual = natural – ½ x output gap Slope(PPF)=- Px/Py -- production choice-price ratio real exchange rate= E x (Pus/Peu) in US MARKET for EUROS nominal ex rt x relative price level balance of payments: CA + FA = 0 CA = -FA Velocity of money: nominal GDP /MS MS x V = P x Y (Y=rGDP)...
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