EC 205 Lecture 11 23/03/15
|
|
- Bertha Brooks
- 5 years ago
- Views:
Transcription
1 EC 205 Lecture 11 23/03/15 Announcement: Makeup exam will be held this week! Second Half of the Course: Short Run Macroeconomics - Focus on: SR fluctuations in output and how to stabilize them Inflation Unemployment We start with Chapter 4 & 5 Money Quantity Theory of Money Money Demand NOTE: In the new edition, we skip most of Chp 4. Follow the slides. 0
2 The connection between money and prices Inflation rate = the percentage increase in the average level of prices. Price = amount of money required to buy a good. Because prices are defined in terms of money, we need to consider the nature of money, the supply of money, and how it is controlled. 1
3 Money: Definition Money is the stock of assets that can be readily used to make transactions. Money stock Income flow 2
4 Money: Functions medium of exchange we use it to buy stuff store of value transfers purchasing power from the present to the future unit of account the common unit by which everyone measures prices and values 3
5 Money: Types 1. Fiat money has no intrinsic value example: the paper currency we use 2. Commodity money has intrinsic value examples: gold coins, cigarettes in P.O.W. camps 4
6 The money supply and monetary policy definitions The money supply is the quantity of money available in the economy. Monetary policy is the control over the money supply. Monetary policy is conducted by a country s central bank Through Open market operations The purchase and sale of government bonds by the central bank Purchases of bonds and FX to increase M Sale of bonds and FX to decrease M 5
7 Money supply measures, Turkey, end-of symbol C M1 M2 assets included Currency C + demand deposits, travelers checks, other checkable deposits M1 + small time deposits, savings deposits, money market mutual funds, money market deposit accounts amount ($ billions) $20 $40 $195 6
8 Money supply measures, USA, May 2009 symbol C M1 M2 assets included Currency C + demand deposits, travelers checks, other checkable deposits M1 + small time deposits, savings deposits, money market mutual funds, money market deposit accounts amount ($ billions) $850 $1596 $8328 7
9 The Quantity Theory of Money A simple theory linking the inflation rate to the growth rate of the money supply. A classical theory in essence since prices are assumed to be flexible. It is agreed that it holds relatively well in the long-run. Begins with the concept of velocity 8
10 Velocity basic concept: the rate at which money circulates definition: the number of times the average dollar bill changes hands in a given time period example: In 2009, $500 billion in transactions money supply = $100 billion The average dollar is used in five transactions in 2009 So, velocity = 5 9
11 Velocity, cont. This suggests the following definition: V = P T M where V = velocity P = price of a typical transaction T = number of transactions M = money supply 10
12 Velocity, cont. Use nominal GDP as a proxy for total transactions. Then, P Y V = M where P = price of output (GDP deflator) Y = quantity of output (real GDP) P Y = value of output (nominal GDP) 11
13 The quantity equation The quantity equation M V = P Y follows from the preceding definition of velocity. It is an identity: it holds by definition of the variables. 12
14 Money demand and the quantity equation M/P = real money balances, the purchasing power of the money supply. A simple money demand function: (M/P) d = ky where k = how much money people wish to hold for each dollar of income. (k is exogenous) 13
15 Money demand and the quantity equation Simple money demand: (M/P) d = ky quantity equation: M V = P Y Money Demand equation offers another way to view the quantity equation: k = 1/V When people hold lots of money relative to their incomes (k is large), money changes hands infrequently (V is small). 14
16 Back to the quantity theory of money starts with quantity equation assumes V is constant & exogenous: Then, quantity equation becomes: V = V M V = P Y 15
17 The quantity theory of money, cont. M V = P Y How the price level is determined: With V constant, the money supply (M) determines nominal GDP (P Y ). Real GDP is determined by the economy s supplies of K and L and the production function (Chp. 3). The price level is P = (nominal GDP)/(real GDP). 16
18 The quantity theory of money, cont. Recall: The growth rate of a product equals the sum of the growth rates. The quantity equation in growth rates: M V P Y + = + M V P Y The quantity theory of money assumes V V is constant, so = 0. V 17
19 The quantity theory of money, cont. π (Greek letter pi ) denotes the inflation rate: π = P P The result from the preceding slide: M P Y = + M P Y Solve this result for π: π M = M Y Y 18
20 The quantity theory of money, cont. π M = M Y Y Normal economic growth requires a certain amount of money supply growth to facilitate the growth in transactions. Money growth in excess of this amount leads to inflation. 19
21 The quantity theory of money, cont. π M = M Y Y Y/Y depends on growth in the factors of production and on technological progress (all of which we take as given, for this model). Hence, the Quantity Theory predicts a one-for-one relation between changes in the money growth rate and changes in the inflation rate. 20
22 Confronting the quantity theory with data The quantity theory of money implies: 1. Countries with higher money growth rates should have higher inflation rates. 2. The long-run trend behavior of a country s inflation should be similar to the long-run trend in the country s money growth rate. Are the data consistent with these implications? 21
23 International data on inflation and money growth, Belarus Inflation rate (percent) Malta Mexico U.S. Serbia Zambia Iraq Turkey Suriname Russia 5 0 Cyprus China Money supply growth (percent) 22
24 % change from 12 mos. earlier U.S. inflation and money growth, % 12% 10% 8% 6% 4% 2% inflation rate 0% M2 growth rate
25 % change from 12 mos. earlier U.S. inflation and money growth, % 12% 10% 8% 6% 4% 2% Inflation and money growth have the same long-run trends, as the quantity theory predicts. 0%
26 Seigniorage To spend more without raising taxes or selling bonds, the govt can print money. The revenue raised from printing money is called seigniorage The inflation tax: Printing money to raise revenue causes inflation. Inflation is like a tax on people who hold money. Q: What is the potential problem that you can see about this type of revenue raising? 25
27 Inflation and interest rates Nominal interest rate, i not adjusted for inflation Real interest rate, r adjusted for inflation: The Fisher equation: r i π i r π e + π e where : π : ex ante (before inflation happens, expected) also denoted as Eπ ex post (realized/actual inflation) 26
28 The Fisher effect The Fisher equation: Chap 3: S = I determines r. Hence, a 1% increase in π e increase in i. i r π e + causes an equal This one-for-one relationship is called the Fisher effect. 27
29 U.S. inflation and nominal interest rates, % 14% nominal interest rate 10% 6% 2% inflation rate -2%
30 Inflation and nominal interest rates across countries, Nominal interest rate (percent, logarithmic scale) 100 Georgia Brazil Romania Turkey Zimbabwe 10 Israel Kenya 1 U.S. Germany Ethiopia Inflation rate (percent, logarithmic scale) 29
31 NOW YOU TRY: Applying the theory Suppose V is constant, M is growing 5% per year, Y is growing 2% per year, and r = 4. a. Solve for i. b. If the Fed increases the money growth rate by 2 percentage points per year, find i. c. Suppose the growth rate of Y falls to 1% per year. What will happen to π? What must the Fed do if it wishes to keep π constant? 30
32 NOW YOU TRY: Answers V is constant, M grows 5% per year, Y grows 2% per year, r = 4. a. First, find π = 5 2 = 3. Then, find i = r + π = = 7. b. i = 2, same as the increase in the money growth rate. c. If the Fed does nothing, π = 1. To prevent inflation from rising, Fed must reduce the money growth rate by 1 percentage point per year. 31
33 Money demand and the nominal interest rate In the quantity theory of money, the demand for real money balances depends only on real income Y. Another determinant of money demand: the nominal interest rate, i. the opportunity cost of holding money (instead of bonds or other interest-earning assets). Hence, i in money demand. 32
34 The money demand function General money demand function: d ( M P) = LiY (, ) (M/P ) d = real money demand, depends negatively on i i is the opp. cost of holding money positively on Y higher Y more spending so, need more money ( L is used for the money demand function because money is the most liquid asset.) 33
35 The money demand function ( M P) = LiY (, ) When people are deciding whether to hold money or bonds, they don t know what inflation will turn out to be. Hence, the nominal interest rate relevant for money demand is r + Eπ. d = L( r + E π, Y ) 34
36 Equilibrium (Money demand=money supply) M P = Lr ( + E π, Y) The supply of real money balances Real money demand 35
37 What determines what variable M r M = Lr ( + E π, Y) P how determined (in the long run) exogenous (the Central Bank) adjusts to ensure S = I Y P Y = F ( K, L ) adjusts to ensure M L ( i, Y ) P = 36
MACROECONOMICS. N. Gregory Mankiw. Money and Inflation 8/15/2011. In this chapter, you will learn: The connection between money and prices
% change from 12 mos. earlier % change from 12 mos. earlier 2 0 1 0 U P D A T E S E V E N T H E D I T I O N 8/15/2011 MACROECONOMICS N. Gregory Mankiw PowerPoint Slides by Ron Cronovich C H A P T E R 4
More informationmacro macroeconomics Money and Inflation N. Gregory Mankiw CHAPTER FOUR PowerPoint Slides by Ron Cronovich fifth edition
macro CHAPTER FOUR Money and Inflation macroeconomics fifth edition N. Gregory Mankiw PowerPoint Slides by Ron Cronovich 2002 Worth Publishers, all rights reserved In this chapter you will learn The classical
More informationECON 3010 Intermediate Macroeconomics. Chapter 5 Inflation: Its Causes, Effects, and Social Costs
ECON 3010 Intermediate Macroeconomics Chapter 5 Inflation: Its Causes, Effects, and Social Costs U.S. inflation 1960 2012 12% % change from 12 mos. earlier 10% 8% 6% 4% 2% % change in GDP deflator 0% 1960
More informationThe classical theory of inflation. causes effects. Classical assumes prices are flexible & markets clear Applies to the long run
Money and inflation The classical theory of inflation causes effects Classical assumes prices are flexible & markets clear Applies to the long run 15% 12% % change in CPI from 12 months earlier 9% long-run
More informationMACROECONOMICS. Inflation: Its Causes, Effects, and Social Costs. N. Gregory Mankiw. PowerPoint Slides by Ron Cronovich
5 : Its Causes, Effects, and Social Costs MACROECONOMICS N. Gregory Mankiw Modified for EC 204 by Bob Murphy PowerPoint Slides by Ron Cronovich 2013 Worth Publishers, all rights reserved IN THIS CHAPTER,
More informationmacro macroeconomics Money and Inflation (chapter 4) N. Gregory Mankiw The classical theory of inflation causes effects social costs
macro Topic 7: (chapter 4) macroeconomics fifth edition N. Gregory Mankiw PowerPoint Slides by Ron Cronovich 2002 Worth Publishers, all rights reserved In this chapter you will learn The classical theory
More informationChapter 5 Inflation: Its Causes, Effects, and Social Costs
Chapter 5 Inflation: Its Causes, Effects, and Social Costs Modified by Yun Wang Eco 3203 Intermediate Macroeconomics Florida International University Summer 2017 2016 Worth Publishers, all rights reserved
More informationThe classical theory of inflation causes effects social costs. -- assumes prices are flexible & markets clear. Applies to the long run.
In this chapter you will learn Macroeconomics Money and Inflation Professor Hisahiro Naito The classical theory of inflation causes effects social costs Classical -- assumes prices are flexible & markets
More informationChapter 4. U.S. inflation & its trend, The connection between money and prices
Chapter 4 The classical theory of inflation causes effects social costs Classical -- assumes prices are flexible & markets clear. Applies to the long run. slide 0 16 U.S. inflation & its trend, 1960-2001
More informationEC 205 Macroeconomics I. Lecture 5
EC 205 Macroeconomics I Lecture 5 Macroeconomics I Chapter 3: The Science of Macroeconomics Outline of model A closed economy, market-clearing model Supply side factor markets determination of output/income
More informationECON 3560/5040 Week 5
ECON 3560/5040 Week 5 1. What is Money? MONEY AND INFLATION - Definition: the stock of assets that can be readily used to make transaction - The functions of money Store of value: a way to transfer purchasing
More informationChapter 7: Money and Inflation. Instructor: Dmytro Hryshko
Chapter 7: Money and Inflation Instructor: Dmytro Hryshko Money and Its Functions Money is an asset that can be used to support transactions. Functions of money: 1 A Store of value: use money to support
More informationChapter 4 Money and Inflation
Chapter 4 Money and Inflation Zhengyu Cai Ph.D. Institute of Development Southwestern University of Finance and Economics All rights reserved http://www.escience.cn/people/zhengyucai/index.html Refresh
More informationMoney, Banking and the Federal Reserve
Money, Banking and the Federal Reserve What Is Money? Money is any asset that can easily be used to purchase goods and services. Fiat money : Money, such as paper currency, that is authorized by a central
More informationECON 3010 Intermediate Macroeconomics. Chapter 4 The Monetary System: What It Is and How It Works
ECON 3010 Intermediate Macroeconomics Chapter 4 The Monetary System: What It Is and How It Works Money: Definition Money is the stock of assets that can be readily used to make transactions. Money: Functions
More informationOutline. What is Money? What does affect the supply of Money? What does affect the demand of Money? Asset Portfolio Decision
TOPIC 5 Money 1 Outline What is Money? What does affect the supply of Money? What does affect the demand of Money? Asset Portfolio Decision Quantitative Theory of Money Equilibrium in the Money Market
More informationThe Monetary System: What It Is and How It Works
4 The Monetary System: What It Is and How It Works CHAPTER 5 Inflation Modified by Ming Yi 2016 Worth Publishers, all rights reserved 3 IN THIS CHAPTER, YOU WILL LEARN: The definition, functions, and types
More informationMODERN PRINCIPLES OF ECONOMICS Third Edition. Chapter 5: Inflation
MODERN PRINCIPLES OF ECONOMICS Third Edition Chapter 5: Inflation 1 Key points The Quantity Theory of Money Money Demand and the Market for Real Money Balances Costs and Benefits of Inflation Why inflation?
More informationECONOMIC GROWTH 1. THE ACCUMULATION OF CAPITAL
ECON 3560/5040 ECONOMIC GROWTH - Understand what causes differences in income over time and across countries - Sources of economy s output: factors of production (K, L) and production technology differences
More information9. ISLM model. Introduction to Economic Fluctuations CHAPTER 9. slide 0
9. ISLM model slide 0 In this lecture, you will learn an introduction to business cycle and aggregate demand the IS curve, and its relation to the Keynesian cross the loanable funds model the LM curve,
More informationEC 205 Macroeconomics I Fall Problem Session 3 Sollutions. Q1-Suppose in 2006, the CPI equals 100. That year, John borrows a nominal value of
Department of Economics Boğaziçi University EC 205 Macroeconomics I Fall 2015 Problem Session 3 Sollutions Q1-Suppose in 2006, the CPI equals 100. That year, John borrows a nominal value of $1, 000 from
More informationMacroeconomics 1 Lecture 11: ASAD model
Macroeconomics 1 Lecture 11: ASAD model Dr Gabriela Grotkowska Lecture objectives difference between short run & long run aggregate demand aggregate supply in the short run & long run see how model of
More informationMoney, prices and exchange rates in the long run
Money, prices and exchange rates in the long run Outline Part I: Money and inflation 1. Definition of money 2. Money supply and money demand 3. The neutrality of money 4. The dichotomy principle and its
More informationIntroduction to Economic Fluctuations
Chapter 9 Introduction to Economic Fluctuations slide 0 In this chapter, you will learn facts about the business cycle how the short run differs from the long run an introduction to aggregate demand an
More informationmacro macroeconomics Aggregate Demand I N. Gregory Mankiw CHAPTER TEN PowerPoint Slides by Ron Cronovich fifth edition
macro CHAPTER TEN Aggregate Demand I macroeconomics fifth edition N. Gregory Mankiw PowerPoint Slides by Ron Cronovich 2002 Worth Publishers, all rights reserved In this chapter you will learn the IS curve,
More informationIntermediate Macroeconomic Theory / Macroeconomic Analysis (ECON 3560/5040) Midterm Exam (Answers)
Intermediate Macroeconomic Theory / Macroeconomic Analysis (ECON 3560/5040) Midterm Exam (Answers) Part A (15 points) State whether you think each of the following questions is true (T), false (F), or
More informationExam #2 Review Answers ECNS 303
Exam #2 Review Answers ECNS 303 Exam #2 will cover all the material we have covered since Exam #1. In addition to working these problems, I would recommend reviewing all of your old class notes and quizzes,
More informationECON 3560/5040 Week 8-9
ECON 3560/5040 Week 8-9 AGGREGATE DEMAND 1. Keynes s Theory - John Maynard Keynes (1936) criticized classical theory for assuming that AS alone capital, labor, and technology determines national income
More informationIII. 9. IS LM: the basic framework to understand macro policy continued Text, ch 11
Objectives: To apply IS-LM analysis to understand the causes of short-run fluctuations in real GDP and the short-run impact of monetary and fiscal policies on the economy. To use the IS-LM model to analyse
More informationChapter 9. Introduction to Economic Fluctuations (Continued) CHAPTER 9 Introduction to Economic Fluctuations. slide 0
Chapter 9 Introduction to Economic Fluctuations (Continued) slide 0 Stabilization Policies Economic fluctuations (or business cycles) refer to deviations of real GDP growth from its long run average growth
More informationChapter 9 Introduction to Economic Fluctuations
Chapter 9 Introduction to Economic Fluctuations facts about the business cycle how the short run differs from the long run an introduction to aggregate demand an introduction to aggregate supply in the
More information1 Figure 1 (A) shows what the IS LM model looks like for the case in which the Fed holds the
1 Figure 1 (A) shows what the IS LM model looks like for the case in which the Fed holds the money supply constant. Figure 1 (B) shows what the model looks like if the Fed adjusts the money supply to hold
More informationMACROECONOMICS. Aggregate Demand I: Building the IS-LM Model. N. Gregory Mankiw. PowerPoint Slides by Ron Cronovich
11 : Building the IS-LM Model MACROECONOMICS N. Gregory Mankiw PowerPoint Slides by Ron Cronovich 2013 Worth Publishers, all rights reserved IN THIS CHAPTER, YOU WILL LEARN: the IS curve and its relation
More informationIntroduction to Economic Fluctuations
CHAPTER 10 Introduction to Economic Fluctuations Modified for ECON 2204 by Bob Murphy 2016 Worth Publishers, all rights reserved IN THIS CHAPTER, OU WILL LEARN: facts about the business cycle how the short
More informationExam 2 Review. 2. If Y = AK 0.5 L 0.5 and A, K, and L are all 100, the marginal product of capital is: A) 50. B) 100. C) 200. D) 1000.
Exam 2 Review 1. If output is described by the production function Y = AK 0.2 L 0.8, then the production function has: A) constant returns to scale. B) diminishing returns to scale. C) increasing returns
More informationAssignment 1: Hand in only Answer. Last Name. First Name. Chapter
Assignment 1: Hand in only Answer Last Name First Name Chapter 3 1 11 21 2 12 22 3 13 23 4 14 24 5 15 25 6 16 7 17 8 18 9 19 10 20 Chapter 4 1 8 15 2 9 16 3 10 17 4 11 18 5 12 19 6 13 7 14 Chapter 3: Page
More informationMoney, Banks and the Federal Reserve
Money, Banks and the Federal Reserve By The Great Gamecock 2009 Prentice Hall Business Publishing Essentials of Economics Hubbard/O Brien, 2e. 1 of 43 2009 Prentice Hall Business Publishing Essentials
More informationRoad Map to this Lecture
Economic Growth 1 Road Map to this Lecture 1. Steady State dynamics: 1. Output per capita 2. Capital accumulation 3. Depreciation 4. Steady State 2. The Golden Rule: maximizing welfare 3. Total Factor
More informationIntermediate Macroeconomic Theory II, Fall 2006 Solutions to Problem Set 4 (35 points)
Intermediate Macroeconomic Theory II, Fall 2006 Solutions to Problem Set 4 (35 points) 1. (16 points) For all of the questions below, draw the relevant curves. (a) (2 points) Suppose that the government
More informationEC 205 Macroeconomics I. Lecture 19
EC 205 Macroeconomics I Lecture 19 Macroeconomics I Chapter 12: Aggregate Demand II: Applying the IS-LM Model Equilibrium in the IS-LM model The IS curve represents equilibrium in the goods market. r LM
More informationChapter 10 Aggregate Demand I CHAPTER 10 0
Chapter 10 Aggregate Demand I CHAPTER 10 0 1 CHAPTER 10 1 2 Learning Objectives Chapter 9 introduced the model of aggregate demand and aggregate supply. Long run (Classical Theory) prices flexible output
More informationMankiw Chapter 10. Introduction to Economic Fluctuations. Introduction to Economic Fluctuations CHAPTER 10
Mankiw Chapter 10 0 IN THIS CHAPTER, WE WILL COVER: facts about the business cycle how the short run differs from the long run an introduction to aggregate demand an introduction to aggregate supply in
More informationMacroeconomics CHAPTER 13. Money, Banking, and the Federal Reserve System
Macroeconomics CHAPTER 13 Money, Banking, and the Federal Reserve System What you will learn in this chapter: The various roles money plays and the many forms it takes in the economy. How the actions of
More informationmacro macroeconomics Economic Growth I Economic Growth I I (chapter 7) N. Gregory Mankiw
macro Topic CHAPTER 4: SEVEN I (chapter 7) macroeconomics fifth edition N. Gregory Mankiw PowerPoint Slides by Ron Cronovich 2002 Worth Publishers, all rights reserved (ch. 7) Chapter 7 learning objectives
More informationThe Monetary System. Economics CHAPTER. N. Gregory Mankiw. Principles of. Seventh Edition. Wojciech Gerson ( )
Wojciech Gerson (1831-1901) Seventh Edition Principles of Economics N. Gregory Mankiw CHAPTER 29 The Monetary System In this chapter, look for the answers to these questions What assets are considered
More informationAGGREGATE DEMAND. 1. Keynes s Theory
AGGREGATE DEMAND 1. Keynes s Theory - John Maynard Keynes (1936) criticized classical theory for assuming that AS alone capital, labor, and technology determines national income proposed that low AD is
More informationChapter 9. Introduction to Economic Fluctuations
Chapter 9 Introduction to Economic Fluctuations 0 1 Learning Objectives difference between short run & long run introduction to aggregate demand aggregate supply in the short run & long run see how model
More information9/10/2017. National Income: Where it Comes From and Where it Goes (in the long-run) Introduction. The Neoclassical model
Chapter 3 - The Long-run Model National Income: Where it Comes From and Where it Goes (in the long-run) Introduction In chapter 2 we defined and measured some key macroeconomic variables. Now we start
More informationProblem Set #2. Intermediate Macroeconomics 101 Due 20/8/12
Problem Set #2 Intermediate Macroeconomics 101 Due 20/8/12 Question 1. (Ch3. Q9) The paradox of saving revisited You should be able to complete this question without doing any algebra, although you may
More informationReal GDP Growth in the United States Introduction to Economic Fluctuations slide 2.
Real GD Growth in the United States 10 ercent change from 4 quarters 8 earlier Average growth rate = 3.5% 6 4 2 0-2 -4 1960 1965 1970 1975 1980 1985 1990 1995 2000 Introduction to Economic Fluctuations
More informationFETP/MPP8/Macroeconomics/Riedel. Money, Interest Rates and the Exchange Rate
FETP/MPP8/Macroeconomics/Riedel Money, Interest Rates and the Exchange Rate Money, Interest Rates and the Exchange Rate In the previous lecture we learned that the exchange rate between two currencies
More informationThe Money Market. A.P. Economics Unit 4: Financial Sector. Ms. Trimels
The Money Market A.P. Economics Unit 4: Financial Sector Ms. Trimels The Money Supply (Sm) A nation s money supply: the amount of money available to households and firms at any particular time. It measures
More informationPart I (45 points; Mark your answers in a SCANTRON)
Final Examination Name: ECON 4020/ SPRING 2005 Instructor: Dr. M. Nirei 1:30 3:20 pm, April 28, 2005 Part I (45 points; Mark your answers in a SCANTRON) (1) The GDP deflator is equal to: a. the ratio of
More informationEC 205 Lecture 20 04/05/15
EC 205 Lecture 20 04/05/15 Remaining material till the end of the semester: Finish Chp 14 (1 subsection left) Open economy version of IS-LM (Chp 6.1&6.3+13) Chp 16 OR Dynamic macro models (As time permits)
More informationIntroduction to Economic Fluctuations. Instructor: Dmytro Hryshko
Introduction to Economic Fluctuations Instructor: Dmytro Hryshko 1 / 32 Outline facts about the business cycle how the short run differs from the long run an introduction to aggregate demand an introduction
More informationECO202: PRINCIPLES OF MACROECONOMICS SECOND MIDTERM EXAM SPRING 2009 Prof. Bill Even FORM 1. Directions
ECO202: PRINCIPLES OF MACROECONOMICS SECOND MIDTERM EXAM SPRING 2009 Prof. Bill Even FORM 1 Directions 1. Fill in your scantron with your unique id and form number. Doing this properly is worth the equivalent
More informationECO202: PRINCIPLES OF MACROECONOMICS SECOND MIDTERM EXAM SPRING 2009 Prof. Bill Even FORM 4. Directions
ECO202: PRINCIPLES OF MACROECONOMICS SECOND MIDTERM EXAM SPRING 2009 Prof. Bill Even FORM 4 Directions 1. Fill in your scantron with your unique id and form number. Doing this properly is worth the equivalent
More informationName: Intermediate Macroeconomic Theory II, Fall 2008 Instructor: Dmytro Hryshko Problem Set 2 (53 points). Due Friday, November 14
Name: Intermediate Macroeconomic Theory II, Fall 2008 Instructor: Dmytro Hryshko Problem Set 2 (53 points). Due Friday, November 14 1. (18 points, 2 points each) Indicate for each of the statements below
More informationIntermediate Macroeconomics Instructed by: Ming Yi Midterm Exam I (Open-Book) Undergraduate Economics Program, HUST Wednesday, October/19/2016
Intermediate Macroeconomics Instructed by: Ming Yi Midterm Exam I (Open-Book) Undergraduate Economics Program, HUST Wednesday, October/19/2016 Name: Student ID: 1. (5 5 =25 points) Consider a closed economy,
More informationChapter 11 Aggregate Demand I: Building the IS -LM Model
Chapter 11 Aggregate Demand I: Building the IS -LM Model Modified by Yun Wang Eco 3203 Intermediate Macroeconomics Florida International University Summer 2017 2016 Worth Publishers, all rights reserved
More informationBUSI 101 Capital Markets and Real Estate
BUSI 101 Capital Markets and Real Estate PURPOSE AND SCOPE The Capital Markets and Real Estate course (BUSI 101) is intended to acquaint the student with the basic principles of macroeconomics and to give
More informationECO403 - Macroeconomics Faqs For Midterm Exam Preparation Spring 2013
ECO403 - Macroeconomics Faqs For Midterm Exam Preparation Spring 2013 FAQs Question: 53-How the consumer can get the optimal level of satisfaction? Answer: A point where the indifference curve is tangent
More informationChapter8 3/9/2018. MONEY, THE PRICE LEVEL, AND INFLATION Part 2. The Money Market the Demand for Money
Chapter8 MONEY, THE PRICE LEVEL, AND INFLATION Part 2 the Demand for Money How much money do people and business firms want to hold? Depends on four main factors: The price level (P) Real GDP (Y), The
More informationECON 3010 Intermediate Macroeconomics Solutions to Exam #1
ECON 3010 Intermediate Macroeconomics Solutions to Exam #1 Multiple Choice Questions. (25 points; 2.5 pts each) #1. A severe recession is called a(n): a. deflation. b. market-clearing assumption. c. depression.
More informationMACROECONOMICS. Introduction to Economic Fluctuations MANKIW. In this chapter, you will learn. Facts about the business cycle N. GREGORY.
C H T E R 9 Introduction to Economic Fluctuations MCROECONOMICS N. GREGOR MNKIW 7 Worth ublishers, all rights reserved SIXTH EDITION oweroint Slides by Ron Cronovich In this chapter, you will learn facts
More informationEcon 219 Spring Lecture #11
Econ 219 Spring 2006 Lecture #11 Money What is money? Who controls it? Does it matter? When does it matter? 2 Money Functions of money: Medium of exchange Store of value Unit of account Measuring money:
More informationChapter 6. The Open Economy
Chapter 6 0 IN THIS CHAPTER, YOU WILL LEARN: accounting identities for the open economy the small open economy model what makes it small how the trade balance and exchange rate are determined how policies
More informationMoney Supply, Inflation, and Interest Rates
Money Supply, Inflation, and Interest Rates ECON 30020: Intermediate Macroeconomics Prof. Eric Sims University of Notre Dame Spring 2018 1 / 19 Readings GLS Ch. 18 2 / 19 Money, Inflation, and Interest
More informationEC201 Intermediate Macroeconomics Problem Set 1 Solution
EC201 Intermediate Macroeconomics 2009/2010 EC201 Intermediate Macroeconomics Problem Set 1 Solution 1) Given the difference between Gross Domestic Product and Gross National Product for a given economy:
More information3. OPEN ECONOMY MACROECONOMICS
3. OEN ECONOMY MACROECONOMICS The overall context within which open economy relationships operate to determine the exchange rates will be considered in this chapter. It is simply an extension of the closed
More informationMoney and banking (First part) Macroeconomics Money and banking Money and its functions Different money types Modern banking Money creation
Money and banking (First part) Macroeconomics Money and banking Money and its functions Different money types Modern banking Money creation 1 What is money? It is a symbol of success, a source of crime,
More informationEastern Mediterranean University Faculty of Business and Economics Department of Economics Spring Semester
Eastern Mediterranean University Faculty of Business and Economics Department of Economics 2015-16 Spring Semester Duration: 90 minutes ECON102 - Introduction to Economics II Final Exam Type A 2 June 2016
More informationUnderstanding the World Economy Master in Economics and Business Money and inflation Lecture 5
Understanding the World Economy Master in Economics and Business Money and inflation Lecture 5 Nicolas Coeurdacier nicolas.coeurdacier@sciencespo.fr Lecture 5 : Money and inflation 1. History and measurement
More informationECO202: PRINCIPLES OF MACROECONOMICS SECOND MIDTERM EXAM SPRING Prof. Bill Even FORM 1. Directions
ECO202: PRINCIPLES OF MACROECONOMICS SECOND MIDTERM EXAM SPRING 2014 Prof. Bill Even FORM 1 Directions 1. Fill in your scantron with your unique id and form number. Doing this properly is worth the equivalent
More informationECO202: PRINCIPLES OF MACROECONOMICS SECOND MIDTERM EXAM SPRING Prof. Bill Even FORM 2. Directions
ECO202: PRINCIPLES OF MACROECONOMICS SECOND MIDTERM EXAM SPRING 2014 Prof. Bill Even FORM 2 Directions 1. Fill in your scantron with your unique id and form number. Doing this properly is worth the equivalent
More informationECON Intermediate Macroeconomic Theory
ECON 3510 - Intermediate Macroeconomic Theory Fall 2015 Mankiw, Macroeconomics, 8th ed., Chapter 12 Chapter 12: Aggregate Demand 2: Applying the IS-LM Model Key points: Policy in the IS LM model: Monetary
More informationMultiple Choice Questions (3 points each) Please answer the questions on the green scantron.
ECON 203-200, Fall 2006 EXAM #2 Multiple Choice Questions (3 points each) Please answer the questions on the green scantron. 1) If the short run aggregate supply curve is vertical, a decrease in money
More informationSV151, Principles of Economics K. Christ 6 9 February 2012
SV151, Principles of Economics K. Christ 6 9 February 2012 SV151, Principles of Economics K. Christ 9 February 2012 Key terms / chapter 21: Medium of exchange Unit of account Store of value Liquidity Commodity
More informationMonetary Policy and EMU Introduction Why Study Money and Monetary Policy?
Monetary Policy and EMU Introduction Why Study Money and Monetary Policy? Evidence suggests that money plays an important role in generating business cycles Recessions and expansions affect all of us Monetary
More informationTOPIC 5. Fed Policy and Money Markets
TOPIC 5 Fed Policy and Money Markets 1 2 Outline What is Money? What does affect the supply of Money? How the banking system works? What is the Fed and how does it work? What is a monetary policy? What
More informationThe Monetary System. Sherif Khalifa. Sherif Khalifa () The Monetary System 1 / 33
The Monetary System Sherif Khalifa Sherif Khalifa () The Monetary System 1 / 33 Money is the set of assets in an economy that people use to buy goods and services from other people. Money is the stock
More information8/23/2018. Where You Are! Course Webpage. Who am I? Dr. John Neri Office: Morrill Hall, Room 1106D, M and W 10:30am to 11:30am
Where You Are! Economics 305 Macroeconomic Theory M, W, F from 12:00pm to 12:50pm The Friday class is primarily graded quizzes and 3 midterm exams see the syllabus. Text: Gregory Mankiw: Macroeconomics,
More informationNotes VI - Models of Economic Fluctuations
Notes VI - Models of Economic Fluctuations Julio Garín Intermediate Macroeconomics Fall 2017 Intermediate Macroeconomics Notes VI - Models of Economic Fluctuations Fall 2017 1 / 33 Business Cycles We can
More informationThe Monetary System. Sherif Khalifa. Sherif Khalifa () The Monetary System 1 / 32
The Monetary System Sherif Khalifa Sherif Khalifa () The Monetary System 1 / 32 Money is the set of assets in an economy that people use to buy goods and services. Money is the stock of assets that can
More information2. Three Key Aggregate Markets
2. Three Key Aggregate Markets 2.1 The Labor Market: Productivity, Output and Employment 2.2 The Goods Market: Consumption, Saving and Investment 2.3 The Asset Market: Money and Inflation 2.3 The Asset
More informationLIMIT INFLATION Country and Time- Zimbabwe, 2008 Annual Inflation Rate- 79,600,000,000% Time for Prices to Double hours
Inflation 1 Copyright LIMIT INFLATION Country and Time- Zimbabwe, 2008 Annual Inflation Rate- 79,600,000,000% Time for Prices to Double- 24.7 hours What is Inflation? Inflation is rising general level
More informationFed Policy and Money Markets
TOPIC 5 Fed Policy and Money Markets 1 Outline What is Money? What affects the supply of money? How does the banking system work? What is the Fed? How does it work? What is monetary policy? What affects
More informationECON 3010 Intermediate Macroeconomics Exam #2
ECON 3010 Intermediate Macroeconomics Exam #2 Multiple Choice Questions. (25 points; 2.5 pts each) #1. In a 100-percent-reserve banking system, banks: A) can increase the money supply. B) can decrease
More informationECON 3010 Intermediate Macroeconomics Solutions to Exam #2
ECON 3010 Intermediate Macroeconomics Solutions to Exam #2 Multiple Choice Questions. (25 points; 2.5 pts each) #1. To increase the money supply, the Federal Reserve: a. buys government bonds. b. sells
More informationECO202: PRINCIPLES OF MACROECONOMICS SECOND MIDTERM EXAM SPRING Prof. Bill Even FORM 1. Directions
ECO202: PRINCIPLES OF MACROECONOMICS SECOND MIDTERM EXAM SPRING 2015 Prof. Bill Even FORM 1 Directions 1. You may not leave the room until you turn in your exam. 2. Fill in your scantron with your unique
More informationECO202: PRINCIPLES OF MACROECONOMICS SECOND MIDTERM EXAM SPRING Prof. Bill Even FORM 3. Directions
ECO202: PRINCIPLES OF MACROECONOMICS SECOND MIDTERM EXAM SPRING 2015 Prof. Bill Even FORM 3 Directions 1. You may not leave the room until you turn in your exam. 2. Fill in your scantron with your unique
More informationECO202: PRINCIPLES OF MACROECONOMICS SECOND MIDTERM EXAM SPRING Prof. Bill Even FORM 4. Directions
ECO202: PRINCIPLES OF MACROECONOMICS SECOND MIDTERM EXAM SPRING 2015 Prof. Bill Even FORM 4 Directions 1. You may not leave the room until you turn in your exam. 2. Fill in your scantron with your unique
More informationUNIVERSITY OF CALIFORNIA Economics 134 DEPARTMENT OF ECONOMICS Spring 2018 Professor David Romer LECTURE 4
UNIVERSITY OF CALIFORNIA Economics 134 DEPARTMENT OF ECONOMICS Spring 2018 Professor David Romer LECTURE 4 REVIEW OF IS LM/MP FRAMEWORK JANUARY 29, 2018 I. THE IS LM/MP MODEL A. Overview 1. Introduction
More informationMACROECONOMICS. N. Gregory Mankiw. Introduction to Economic Fluctuations 8/15/2011. In this chapter, you will learn: Facts about the business cycle
1 U D T E S E V E N T H E D I T I O N /15/11 MCROECONOMICS N. Gregory Mankiw oweroint Slides by Ron Cronovich C H T E R 9 Introduction to Economic Fluctuations In this chapter, you will learn: facts about
More informationEconomic Growth: Extensions
Economic Growth: Extensions 1 Road Map to this Lecture 1. Extensions to the Solow Growth Model 1. Population Growth 2. Technological growth 3. The Golden Rule 2. Endogenous Growth Theory 1. Human capital
More informationMoney Demand. ECON 40364: Monetary Theory & Policy. Eric Sims. Fall University of Notre Dame
Money Demand ECON 40364: Monetary Theory & Policy Eric Sims University of Notre Dame Fall 2017 1 / 37 Readings Mishkin Ch. 19 2 / 37 Classical Monetary Theory We have now defined what money is and how
More informationDemand for Money MV T = PT,
Demand for Money One of the central questions in monetary theory is the stability of money demand function, i.e., whether and to what extent the demand for money is affected by interest rates and other
More informationChapter 19. Quantity Theory, Inflation and the Demand for Money
Chapter 19 Quantity Theory, Inflation and the Demand for Money Quantity Theory of Money Velocity of Money and The Equation of Exchange M = the money supply P = price level Y = aggregate output (income)
More informationEC3115 Monetary Economics
EC3115 :: L.8 : Money, inflation and welfare Almaty, KZ :: 30 October 2015 EC3115 Monetary Economics Lecture 8: Money, inflation and welfare Anuar D. Ushbayev International School of Economics Kazakh-British
More informationAnswers to Problem Set #8
Macroeconomic Theory Spring 2013 Chapter 15 Answers to Problem Set #8 1. The five equations that make up the dynamic aggregate demand aggregate supply model can be manipulated to derive long-run values
More information