Economic Concepts: IS Curve and Money Demand Dynamics

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.