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Unformatted text preview: Economics 161 Matthias Doepke Monetary Theory Winter 2007 Midterm Review Questions Definitions Question 1: Define the following. 1. The velocity of money. 2. Phillips curve. 3. Currency board. 4. The real interest rate. 5. Real government debt. Short Questions Question 2: Explain the concept of purchasing power parity (PPP). State an equation that summarizes PPP using the nominal exchange rate e , the home price level P , and the foreign price level P ? . Question 3: You are the advisor to the central bank governor of a small Central Asian repub- lic. The governor confides that he has no control over the central government, and that the government is running a persistent primary deficit of 2 percent of GDP. Currently, government debt is still close to zero. The governor wants to minimize inflation in the long run. What is your advice? Question 4: Discuss the likelihood of a speculative attack on a currency under a fixed ex- change rate regime, a floating exchange rate regime, and a currency board.change rate regime, a floating exchange rate regime, and a currency board....
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This note was uploaded on 05/26/2009 for the course ECON 161 taught by Professor Cai during the Winter '04 term at UCLA.
- Winter '04
- Phillips Curve