Money and Banking
Money and Banking ECON 4331
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This 2 page Class Notes was uploaded by Mac Purdy on Monday October 12, 2015. The Class Notes belongs to ECON 4331 at Georgia Southern University taught by Amanda King in Fall. Since its upload, it has received 47 views. For similar materials see /class/222009/econ-4331-georgia-southern-university in Economcs at Georgia Southern University.
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Date Created: 10/12/15
ECON 4331 Spring 2005 A King Final Exam Review Sheet This sheet contains a list of topics and questions to help guide you in your studying Topics that do NOT appear on this sheet may appear on the test if they were discussed in class and topics appearing on the sheet will not necessarily appear on the test Therefore you should make sure to use your class notes while studying as well as this sheet The nal covers chapters 17 18 19 2526 27 Chapter 17 T001s of Monetary Policy and Discount Policy Case You should have a handout for part of this material Fed Funds Rate De nition Why is important in the economy today Where it is determined market for reservesibe able to manipulate this graph Reserve Demand Reserve Supply How the 3 Fed policy tools affect the Fed Funds Rate con rmation in liquidity preference amp MDMS model Dynamic vs Defensive OMOs Advantages Disadvantages of OMOs Discount Policy rely heavily on your case study and the answers discussed in class Lender of last resort Reserve Requirements Pros and cons of using to affect the money supply Chapter 18 C0nduct of Monetary Policy you should have a handout for this material 6 basic goals of monetary policy why each is important inconsistencies among the goals types of unemployment why don t target 0 unemployment optimal level of unemploymentnatural rate of unemployment Central bank targets Intermediate vs Operating Why targets are necessary How targets are chosen Why choosing to target money implies letting interest rates uctuate and vice versa The graphical explanations to support Criteria for choosing targets Chapter 19 The Foreign Exchange Market and Exchange Rates 1 De ne exchange rates 2 forward transactions vs spot exchange rates Why might a forward transaction in exchange rates be useful 3 appreciation vs depreciation be able to identify in examples and define LongRun Behavior of Exchange Rates 1 Understand how the Law of One Price works what it states 2 Purchasing Power Parity What does the theory say What are the implications of in ation in the economy of one of our trading partners for the US exchange rate 3 Purchasing Power Parity holds in the longrun but what are the 2 reasons it might not hold in the shortrun 4 What are the 4 factors that affect exchange rates in the longrun Exchange Rates in the Short Run 1 Comparing expected returns on domestic and foreign deposits 2 Interest Parity Condition 3 Equilibrium in Foreign Exchange Market 4 Shifts in expected return schedule for foreign depositsdomestic deposits a Changes in real rate vs changes in expected in ation for domestic deposit shifts Chapter 2526 ADAS Analysis and Monetary Policy Be sure to rely heavily on your notes for this section The 5 graphs are NOT in your textbook Review of AD Shifting AD Shortrun vs Longrun AS Shifts in AS Why PGDP longrun AS Expansionary amp contractionary monetary policy amp the 5 4 if only draw AD AS graph oncegraphs associated with each Effects on money market reserves market foreign exchange market AD AS be sure to label the original problem on ADAS graph Lessons for Monetary Policy tendency to focus on nominal interest rates instead of real need to look at other asset prices not just nominal interest rates use of monetary policy in de ationaryO interest rate periods Chapter 27 In ati0n Causes and Consequences Note we will briefly cover these topics on Tuesday You are only responsible for them to the extent that they are covered in class notes Evidence of in ation as a monetary phenomenon
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