Review-Exam 1

Review-Exam 1 - Economics 121 Pamela Labadie George...

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Unformatted text preview: Economics 121 Pamela Labadie George Washington University Spring 2010 Review - Exam 1 The exam covers Chapters 1-6 and chapter 22, excluding pages 573577 Further Develop- ments in the Keynesian Approach. Chapter 1 1. Basic national income accounting - lecture notes 2. Balance of payments - capital financial account and current account CA + KFA = 0 3. Loanable funds market (or the credit market) S g + S p ( r e , y ) = I ( r e ) + CA. (a) Closed economy: impact of increase in I ( r ), decrease S g , increase in y on expected real rate of interest (b) Open economy: impact of changes in world interest rate r e w on CA, I ( r e ) , S p ( r e , y ). Impact of decrease S g on CA and KFA. 4. Crowding out by government deficit spending in a closed economy versus fiscal multiplier 5. Debt security (such as a bond) 6. Equity - separation of ownership and management, limited liability and residual claimant 7. Business cycle terms: (see lecture notes) (a) amplitude (b) duration (c) peak or trough (d) expansion and recession (e) Procyclical, countercyclical and acyclical (f) Leading indicator, coincident indicator, lagging indicator 1 8. Fisher equation (Note titled Real and Nominal Interest Rates): redistribution between borrowers and lenders when there is unanticipated inflation 9. Behavior of interest rates over the business cycle (procyclical) 10. Twin deficits Chapter 2 1. Role of financial intermediaries 2. Direct versus indirect finance 3. Primary versus secondary markets 4. Dealer versus a broker 5. OTC versus an organized exchanged5....
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Review-Exam 1 - Economics 121 Pamela Labadie George...

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