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THREE-SECTOR AGGREGATE EXPENDITURES LINE: A graphical depiction of the relation between aggregate expenditures by the three domestic macroeconomic sectors (household, business, and government) and the level of aggregate income or production. The three-sector aggregate expenditures line combines consumption expenditures, investment expenditures, and government purchases. The slope of this aggregate expenditures line is based on the marginal propensity to consume, adjusted for marginal propensities of the other expenditures that are assumed to be induced when constructing the line. This is one of three aggregate expenditures lines based on the number of sectors included. The others are the two-sector aggregate expenditures line and the four-sector aggregate expenditures line.
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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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CONSUMPTION The use of resources, goods, or services to satisfy wants and needs. At the macroeconomic level, consumption is reflected as expenditures by the household sector on gross domestic product. At the microeconomic level, consumption is important to utility, demand, and market exchanges. Consumption is the ultimate goal of economic activity.
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BLACK DISMALAPOD
[What's This?]
Today, you are likely to spend a great deal of time lost in your local discount super center wanting to buy either a coffee cup commemorating last Friday (you know why) or a wall poster commemorating the first day of spring. Be on the lookout for the happiest person in the room.
Your Complete Scope
This isn't me! What am I?
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There were no banks in colonial America before the U.S. Revolutionary War. Anyone seeking a loan did so from another individual.
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"Man is born to live, not to prepare for life. " -- Boris Pasternak, writer
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COLA
Cost of Living Adjustment
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