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AP Macro Equations

Unit Four

TermDefinition
Monetary Base money in circulation + bank reserves kept with the FED = __________
M2 M1 + non-savings time deposits = ________
M3 M2 + near money
Net Worth assets - liabilities = ________
Nominal Interest Rates expected rate of inflation + real interest rate (the real rate of return that lenders want to receive) = _______
Real Interest Rates nominal interest rate - the actual rate of inflation (this is also the rate of return a lender wants to earn beyond inflation) = _______
Equation of Exchange M(money supply) x V(velocity) = nominal GDP
Nominal GDP M(money supply) x V(velocity) = _________
Money Multiplier 1/reserve requirement = ______
Created by: rcooke
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