review sheet for ecn 302 copy

review sheet for ecn 302 copy - When some money is held as...

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Okun law= 3.5-(2xchange in unemployment rate) Government purchase multiplier= 1/(1-MPC) Tax Multiplier= -MPC/ (1-MPC) Graphs pg. 279, 299, 305 (r D = 0.10) RR = (r D )(D) = (0.10)($15000) = $1500 ER = R – RR = $4000 - $1500 = $2500 Money Multiplier If all money is held as deposits we have an infinite geometric series and the Money Multiplier = 1/reserve-deposit ratio(rr) and the Money Supply (M) = (1/rr)*R
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Unformatted text preview: When some money is held as currency by the public the Money Multiplier = (cr + 1)/(cr + rr), where cr is currency-deposit ratio and the Money Supply (M) = (cr + 1)/(cr + rr)*B, where B is the monetary base which equals Currency held by the public (C) and Reserves (R)...
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