The table below shows hypothetical values, in billions of rands, of different forms of money. A. B. C. D. E. F. G. H. Currency Money market mutual fund shares Saving account deposits Money market deposit accounts Demand and checkable deposits Small-denomination time deposits Traveler's checks 3-month Treasury bills 2017 950 677 5,600 1,200 1,010 830 4 1,996 2018 960 678 5,880 1,231 982 861 4 2,384 2019 962 676 6,068 1,260 990 1,123 3 2,446 2020 967 685 6,205 1,315 1,003 1,566 2 2,512 Use the table to calculate the M1 and M2 money supplies for each year, as well as the growth rates of the M1 and M2 money supplies from the previous year.
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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