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RESERVE RATIO: The amount of reserves required by the Federal Reserve System as a ratio of the amount deposits backed by the reserves. Modern reserve ratios are in the range of 1-3% for checkable deposits. The reserve ratio plays a key role in the deposit multiplier. The simple deposit multiplier is simply the inverse of the reserve ratio. If the reserve ratio is 5%, then the deposit multiplier is 20. It's just that simple.

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Lesson 7: Market | Unit 4: Adjustment Page: 14 of 22

Topic: Shortage <=PAGE BACK | PAGE NEXT=>

A shortage exists if the quantity demanded is greater than the quantity supplied at the current market price.
  • A shortage exists if the market price is 30 cents.
  • The quantity supplied is 200 tapes and the quantity demanded is 600 tapes, giving a shortage of 400 tapes.
  • This shortage induces the price to rise up to the equilibrium level of 50 cents.

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SLOPE, AGGREGATE DEMAND CURVE

The negative slope of aggregate demand curve, reflecting the inverse relation between the price level and aggregate expenditures on real production, is attributable to three primary effects--real-balance effect, interest-rate effect, and net-export effect.

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BROWN PRAGMATOX
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Today, you are likely to spend a great deal of time driving to a factory outlet looking to buy either storage boxes for your summer clothes or 500 feet of coaxial cable. Be on the lookout for cardboard boxes.
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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.
"If anything terrifies me, I must try to conquer it. "

-- Francis Charles Chichester, yachtsman, aviator

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