Macroeconomic Notes for April 18th For Professor Kaplan at CU Boulder
Macroeconomic Notes for April 18th For Professor Kaplan at CU Boulder BCOR 2001
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This 4 page Class Notes was uploaded by Robin Silk on Monday April 25, 2016. The Class Notes belongs to BCOR 2001 at University of Colorado at Boulder taught by Emily Edwards and Kevin McMahon in Winter 2016. Since its upload, it has received 33 views. For similar materials see Principles of Marketing and Management in Business at University of Colorado at Boulder.
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Date Created: 04/25/16
th Monday April 18 1. Chinese Pegged Currency a. Why Peg? i. Pegging increases the value of the dollar in relation to the Yuan; this lowers the price of China’s goods for American consumers ii. To create industry and jobs iii. To transition to a market economy b. How to Target the Peg? i. Increase the demand for dollars ii. The Chinese gov’t purchases US gov’t treasuries (debt) c. What it looks like when treasuries are purchased to peg a currency 2. Dollarization a. Ecuador and Zimbabwe i. Suffered hyperinflation resulting from printing too much currency ii. In order to combat this, dropped their currency and picked up the $ b. At its Core i. Dollarization is picking up the dollar as the primary currency ii. Countries that dollarize cannot print dollars 1. Get dollars through tourism and exports 3. Currency Union a. Eurozone i. 1989: Berlin Wall came down ii. Maastricht Treaty 1. Join the Eurozone Give up your currency, become unified 2. Don’t join the Eurozone No benefits b. Comparison c. US Eurozone d. Population 323m 338m e. Central Govt Yes 18 countries f. Central Bank (Fed) European Central Bank g. Common Language English No h. Common Culture Yes No 4. Recitation Review Session a. Who demands dollars i. Anyone who wants American goods, services, investments b. Who supplies dollars i. Americans when we travel (tourism) and buy foreign goods c. What happens when the dollar appreciates i. Purchasing power increases; we buy more foreign goods 1. Supply goes up as we try to buy more foreign goods and travel more 2. Demand goes down because dollars are more expensive ii. d. Billion Dollar Startups i. Immigrants come to the US, create billion dollar startups, which create a shit ton of jobs. This is a good thing e. Beta i. Check notes it’s easy shit 1. B > 1 stock moves more than market 2. B = 1 stock moves equal to market 3. B < 1 stock moves less than market f. MBS Mortgage Backed Security i. Pool of mortgages g. CDO Collateralized Debt Obligation i. Pool of mortgages, car loans, bonds, ii. Assets that pay a return h. CDS Credit Default Swap i. Insurance policy on debt
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