Ch. 8: Money and inflation

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Ch. 8: Money and inflation. Money Definition Types Functions Gresham’s law & bimetallic standard History of banking Fractional reserve banking and the creation of money. History and structure of the Fed Fed tools for controlling the money supply Discount rate Reserve ratio
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Ch. 8: Money and inflation
  • Money
  • Definition
  • Types
  • Functions
  • Gresham’s law & bimetallic standard
  • History of banking
  • Fractional reserve banking and the creation of money
  • History and structure of the Fed
  • Fed tools for controlling the money supply
  • Discount rate
  • Reserve ratio
  • Open market operations
  • Components of the money supply
  • Monetary base, reserves, M1, M2
  • Ch. 8: Money and inflation
  • Balance sheet entries for
  • Open market operation
  • Change in reserve ratio
  • Change in public cash holdings
  • Equation of exchange
  • Quantity theory of money
  • Link between inflation and money supply growth
  • Money market and determination of interest rates
  • Factors affecting money supply /demand
  • Bond market when interest rates are above or below equililbrium.
  • Financial markets
  • Present and future value
  • Bond prices and interest rates
  • One year bond
  • Zero coupon bond
  • Determinants of bond yields
  • Risk
  • Term
  • Liquidity
  • Stock market
  • Fundamental value of stock
  • Stock metrics
  • PE ratio
  • Beta
  • Factors influencing stock prices
  • Efficient markets hypothesis
  • Futures markets and price expectations.
  • Ch. 9: Exchange rates and the balance of payments
  • Supply/demand model and determinants of exchange rates
  • Interest rates, imports/exports, expected asset returns, inflation, expected future exchange rates, etc.
  • Interest rate parity
  • Conditions required for parity
  • Arbitrage opportunities when parity doesn’t hold
  • Implications for exchange rate movements when interest rates aren’t equal
  • Purchasing power parity
  • Conditions required for parity
  • Arbitrage opportunities when parity doesn’t hold
  • Implications for movements in exchange rates based on inflation differentials
  • Ch. 9: Exchange rates and the balance of payments
  • (X-M=(S-I) + (Tn-G)
  • X-M as indicator of a country’s status as internat’l borrower or lender.
  • Factors affecting a country’s status as borrower or lender
  • Debtor/creditor versus borrower/lender
  • Balance of payments accounts
  • Capital, current, official settlements
  • Debits vs credits in accounts
  • Implications of surplus or deficit in each account
  • Exchange rate regimes
  • Flexible
  • Fixed
  • Crawling peg
  • How central banks can manipulate exchange rates and implications for official settlements account and trade flows
  • Ch. 10: AD and AS
  • Determinants of long run AS
  • Labor market
  • Production function
  • Determinants of short run AS
  • Nominal wages sticky in short run
  • Effect of a movement along SRAS on prices, real wages and employment
  • LRAS
  • Determinants of AD
  • C+I+G+(X-M)
  • Why AD is downward sloping.
  • Fiscal policy (taxes or spending)
  • Expectations about inflation, future income
  • Exchange rates
  • Ch10 AD and AS
  • Implications of inflation/recessionary gap for
  • Real wages relative to equilibrium
  • Employment relative to equlibrium
  • Unemployment relative to natural rate
  • Real GDP relative to potential
  • Short run and long run effects of a change in AD.
  • Keynesians versus others on merits of policy interventions to stabilize economy.
  • Related Search
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