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AGGREGATE DEMAND: The total (or aggregate) real expenditures on final goods and services produced in the domestic economy that buyers would willing and able to make at different price levels, during a given time period (usually a year). Aggregate demand (AD) is one half of the aggregate market analysis; the other half is aggregate supply. Aggregate demand, relates the economy's price level, measured by the GDP price deflator, and aggregate expenditures on domestic production, measured by real gross domestic product. The aggregate expenditures are consumption, investment, government purchases, and net exports made by the four macroeconomic sectors (household, business, government, and foreign).
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Lesson 18: Banking | Unit 3: Reserve Banking
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Page: 12 of 24
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Topic:
Legal, Required, and Excess Reserves
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1. Legal reserves: - Vault cash and deposits with the Federal Reserve that can be used to satisfy the legal reserve requirements and are needed for daily operations.
2. Required reserves: - The vault cash and deposits with the Federal Reserve that they have to keep to back deposits.
3. Excess reserves: - Any reserves over and above required reserves.
- Excess reserves don't add to revenue and profit.
Two uses of excess reserves: - First: banks use them for loans.
- Second: banks use them for investment securities.
Important point: - Controlling excess reserves is key to controlling the nation's money supply.
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SPECIAL INTEREST GROUPS A group of people with shared interests who have more to gain or lose from a candidate, issue, or policy and thus try extra hard to ensure that the political system is aware of their preferences. Special interest groups are the other side of the coin of voter apathy. Motivated rational choices, some people have little or no involvement in the political system others have a great deal. The study of public choice indicates that special interest groups are one source of government inefficiency. Other sources are politicians, voters, and government bureaucracies.
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PURPLE SMARPHIN
[What's This?]
Today, you are likely to spend a great deal of time flipping through the yellow pages trying to buy either a velvet painting of Elvis Presley or a wall poster commemorating yesterday. Be on the lookout for the last item on a shelf.
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This isn't me! What am I?
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Okun's Law posits that the unemployment rate increases by 1% for every 2% gap between real GDP and full-employment real GDP.
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"If anything terrifies me, I must try to conquer it. " -- Francis Charles Chichester, yachtsman, aviator
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ICCH
International Commodities Clearing House
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