-onsider the following data (all values are in billions of dollars): Currency Checkable deposits Bank reserves C/D R/D June 1930 June 1931 $3.681 $3.995 $21.612 $19.888 $3.227 $3.307 Calculate the values for each period for the currency-to-deposit ratio, the ratio of total reserves to deposits, the monetary base, the money multiplier, and the M1 money supply. (Enter your responses rounded to two decimal places; the monetary base and the M1 money supply are in billions of dollars.) Monetary Base Money Multiplier M1 Money Supply 1930 June 1932 $4.959 $15.49 $2.829 1931 1932
IS-LM-PC Analysis
The IS (Investment Saving), LM (Liquidity Preference- Money Supply), and PC (Philips Curve) is the model that looks at the dynamics of output and inflation. It takes into account the central bank policy decision to adjust the inflation and real interest rate in the economy. It enables the economist to weather to priorities between employment and inflation rate analyzing the model. It is a practice-driven approach adopted by economists worldwide.
IS-LM Analysis
The term IS stands for Investment, Savings, and LM stands for Liquidity Preference, Money Supply. Therefore, the term IS-LM model is known as Investment Savings – Liquidity preference money Supply. This model was introduced by a Keynesian macroeconomic theory which shows the relationship between the economic goods market and loanable funds market or money market. In other words, it shows how the market for real goods interacts with the financial markets to strike a balance between the interest rate and total output in the macroeconomy. This particular model is designed in the form of a graphical representation of the Keynesian economic theory principle. The output and money are the two important factors in an economy.
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