ECON 205 Lecture (4.07.2008)

ECON 205 Lecture (4.07.2008) - ECON-205 Lecture 04-07-2008...

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ECON-205 Lecture 04-07-2008 Final Exam is not cumulative. .. chapters 11, 12, 13, 14 (few pages), 15, 16 (few pages), 33, 34 Exam is on May 12 th @ 2 PM… please verify Chapter 11 Classical school Page 262… Review - Assumptions were wrong o Full employment is a normal way of life o Assumptions based on Say’s Law (supply creates its own demand) o Wages and prices are flexible - Money market s = f (R) “Savings as a function of R” The higher the interest rate, the more you’ll save upward sloping - I = f (R) “Investment as a function of R, which is rate of interest” The higher the interest rate, the less you’ll borrow downward sloping o For the final exam: Classical school said savings and investment will determine the rate of interest in the free market. Of course, the classical school was wrong. The FRB determines the rate of interest, not the free market. -
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This note was uploaded on 09/26/2009 for the course ECON 205 taught by Professor Kamrany during the Spring '07 term at USC.

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ECON 205 Lecture (4.07.2008) - ECON-205 Lecture 04-07-2008...

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