Econ final review

Econ final review - Econ 5/1/08: Net Financial Flow = how...

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Econ 5/1/08: Net Financial Flow = how much money comes into a country (e.g. US) from foreign investors, and compare it to the cash flow out of the country via local investors - If we send more than we get, then the change in flow will be negative - Value of dollar will increase, because demand will go up as a result of large, positive financial flow - Trade deficit was created in 80’s b/c dollar was high American goods were expensive and foreign goods were reasonably cheap Important Topics for Final: Ch.11 (monetary policy) M1 and M2 definitions of money (see graph) - Fractional Reserve System when looking at checking accounts, a certain amount of money needs to be frozen Required reserves (review shit about how banks hold money) - Fed monetary policy when Fed buys/sells bonds interest rates know effect i.r. has on monetary policy Ch.12 (Demand for money) How much money we want to hold in M1 (money with highest liquidity), lose potential gain from interest when held in M1
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This note was uploaded on 06/05/2008 for the course ECON Principles taught by Professor Kitsikopolous during the Spring '07 term at NYU.

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Econ final review - Econ 5/1/08: Net Financial Flow = how...

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