New User Special Price Expires in

Let's log you in.

Sign in with Facebook


Don't have a StudySoup account? Create one here!


Create a StudySoup account

Be part of our community, it's free to join!

Sign up with Facebook


Create your account
By creating an account you agree to StudySoup's terms and conditions and privacy policy

Already have a StudySoup account? Login here

Macroeconomics week 12 notes

by: Matt Cutler

Macroeconomics week 12 notes Econ 111

Marketplace > University of Alabama - Tuscaloosa > Econ 111 > Macroeconomics week 12 notes
Matt Cutler
GPA 4.0

Preview These Notes for FREE

Get a free preview of these Notes, just enter your email below.

Unlock Preview
Unlock Preview

Preview these materials now for free

Why put in your email? Get access to more of this material and other relevant free materials for your school

View Preview

About this Document

These notes cover linking open markets
Kent 0. Zirlott
Class Notes
25 ?




Popular in Macroeconomics

Popular in Department

This 1 page Class Notes was uploaded by Matt Cutler on Sunday April 17, 2016. The Class Notes belongs to Econ 111 at University of Alabama - Tuscaloosa taught by Kent 0. Zirlott in Fall 2016. Since its upload, it has received 15 views.


Reviews for Macroeconomics week 12 notes


Report this Material


What is Karma?


Karma is the currency of StudySoup.

You can buy or earn more Karma at anytime and redeem it for class notes, study guides, flashcards, and more!

Date Created: 04/17/16
Chapter 19- Linking Open Markets Monday, April 11, 2016 3:34 PM 1. The Market for Loanable funds a. S= I+NCO • S=Savings= Supply of loanable funds b. Demand for loanable funds: • I= Domestic Investment i. =I+NCO c. NCO is negatively related to the interest rate: downward sloping 2. Budget deficit (Leads to a trade deficit) a. Reduces saving and the supply of loanable funds causing r to rise. b. The higher r makes US bonds more attractive relative to foreign bonds, reduces NCO 3. The market for foreign-currencyexchange a. Another identity from the preceding chapter: i. NCO=NX b. In the market for foreign exchange i. NX is the demand for dollars: 1) Foreigners need dollars to buy US Net exports ii. NCO is the supply of dollars: 1) US residents sell dollars to obtain the foreign currency they need to buy foreign assets. c. Recall: i. The US real exchange rate € measures the quantityof foreign goods and services that trade for one unit of US goods and services NX is the demand 1) E is the real value of a dollar in the market for foreign-currency exchange NCO is the supply 2) D=NX (NX is negatively related to the exchange rates) 3) An increase in E has no effect on saving or investment, so it does not affect NCO or the supply of dollars ii. Anything that increases r: 1) Will reduce NCO and the supply of dollars in the foreign exchange market 2) Result: the real exchange rate appreciates (dollar becomes stronger) iii. The LF market determines r 1) This value of r then determines NCO 2) This value of NCO then determines supply of dollars in foreign exchange market d. Example: i. Suppose the government provides a new tax incentive to encourage investment Market for foreign exchange graph goes directly 1) Real interest rates rise 2) NCO decreases under NCO graph 3) NCO reduces supply of dollars in foreign exchange market… a) Real exchange rate appreciates, reducing net exports


Buy Material

Are you sure you want to buy this material for

25 Karma

Buy Material

BOOM! Enjoy Your Free Notes!

We've added these Notes to your profile, click here to view them now.


You're already Subscribed!

Looks like you've already subscribed to StudySoup, you won't need to purchase another subscription to get this material. To access this material simply click 'View Full Document'

Why people love StudySoup

Steve Martinelli UC Los Angeles

"There's no way I would have passed my Organic Chemistry class this semester without the notes and study guides I got from StudySoup."

Janice Dongeun University of Washington

"I used the money I made selling my notes & study guides to pay for spring break in Olympia, Washington...which was Sweet!"

Jim McGreen Ohio University

"Knowing I can count on the Elite Notetaker in my class allows me to focus on what the professor is saying instead of just scribbling notes the whole time and falling behind."


"Their 'Elite Notetakers' are making over $1,200/month in sales by creating high quality content that helps their classmates in a time of need."

Become an Elite Notetaker and start selling your notes online!

Refund Policy


All subscriptions to StudySoup are paid in full at the time of subscribing. To change your credit card information or to cancel your subscription, go to "Edit Settings". All credit card information will be available there. If you should decide to cancel your subscription, it will continue to be valid until the next payment period, as all payments for the current period were made in advance. For special circumstances, please email


StudySoup has more than 1 million course-specific study resources to help students study smarter. If you’re having trouble finding what you’re looking for, our customer support team can help you find what you need! Feel free to contact them here:

Recurring Subscriptions: If you have canceled your recurring subscription on the day of renewal and have not downloaded any documents, you may request a refund by submitting an email to

Satisfaction Guarantee: If you’re not satisfied with your subscription, you can contact us for further help. Contact must be made within 3 business days of your subscription purchase and your refund request will be subject for review.

Please Note: Refunds can never be provided more than 30 days after the initial purchase date regardless of your activity on the site.