Economic Concepts: IS Curve and Money Demand Dynamics
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16 Terms
Consumer Confidence
Expectation about future economic conditions affecting spending.
Autonomous Consumption
Consumption independent of current income levels.
Aggregate Demand
Total demand for goods and services in an economy.
Exchange Rate
Value of one currency in terms of another.
IS Curve
Graph showing relationship between interest rates and output.
Investment Spending
Expenditure on capital goods for future production.
Net Exports
Exports minus imports in an economy.
Government Purchases
Total spending by government on goods and services.
Interest Rate
Cost of borrowing money, expressed as a percentage.
Money Multiplier
Ratio of money supply to monetary base.
Monetary Base (MB)
Total currency in circulation plus reserves.
Velocity of Money
Rate at which money circulates in the economy.
Quantity Theory of Inflation
Theory linking money supply changes to price levels.
K (Liquidity Preference)
Amount people prefer to hold as money per income unit.
Precautionary Demand
Desire to hold money for unexpected expenses.
Transaction Demand
Money held for everyday transactions and purchases.
Note 
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