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KEYNESIAN AGGREGATE SUPPLY CURVE: A modification of the standard aggregate supply curve used in the aggregate market (or AD-AD) analysis to reflect the basic assumptions of Keynesian economics. The Keynesian aggregate supply curve contains either two or three segments. The strict Keynesian aggregate supply curve contains two segments, a vertical classical range and a horizontal Keynesian range, meeting a right angle and forming a reverse L-shape. An alternative version replaces the right angle intersection with a gradual transition between the two segments that is positively sloped and termed the intermediate range. The modern aggregate supply curve is largely based on this intermediate range.
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Lesson 19: Money Creation | Unit 3: Modern Banking
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Page: 10 of 23
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Topic:
Fractional-Reserve Magic
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Modern banks practice fractional-reserve banking, which is the key to money creation. Note that: - Modern reserves take the form of vault cash and Federal Reserve deposits.
- Both ensure the safety of deposits.
- Banks seek profits by making loans and adding to checkable deposits.
- Checkable deposits add to the money supply.
Money creation:- Banks practice fractional-reserve banking, seek revenue through loans, and keep reserves.
- Banks keep 10% of outstanding deposits in reserves.
- Reserves over those required to are excess reserves.
- If a bank has excess reserves, then it can make loans, increase checkable deposits, and create money.
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INCOME EFFECT The change in quantity demanded that results because a change in the demand price of a good affects real income (that is, the purchasing power of income) even though nominal income remains the same. This is one of two reasons, or effects, underlying the law of demand and the negative slope of the market demand curve. The other is the substitution effect.
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BLACK DISMALAPOD
[What's This?]
Today, you are likely to spend a great deal of time driving to a factory outlet hoping to buy either a battery-powered, rechargeable vacuum cleaner or a remote controlled World War I bi-plane. Be on the lookout for mail order catalogs with hidden messages.
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Potato chips were invented in 1853 by a irritated chef repeatedly seeking to appease the hard to please Cornelius Vanderbilt who demanded french fried potatoes that were thinner and crisper than normal.
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"Nobody can be successful unless he loves his work. " -- David Sarnoff, TV pioneer
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PI
Personal Income
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