ECON final cheat 2 - Money Shifters(exchange rate and...

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Money Shifters (exchange rate and quantity of money) Supply + Demand +_ + imports + exports + capital outflow + capital inflow (foreign invest) - interest rates + interest rates + US trade def + US trade surp + Gov spending + Gov spending +GDP +discount rate - US goods Fiscal Expansionary Monetary Contractionary G+, T- Ms-, r+, disc rate + AD shift right AD shift left + Y - - U + + P - + i n f - + r + + i + ? e ? 0 X 0 + M - + T D - + B D ? ? I - -Short-term flows involve debt instruments with term to
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Unformatted text preview: maturity of less than one year and highly liquid.-Long-term flows = debt instruments with term to maturity of more than one year and less liquid, such as direct Investment.-PPP states that, in the long run, exchange rates in the spot market are determined by Current Account flows • PJ = E * P US...
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