sumassign9

sumassign9 - 1 Intro Macro Assignment 9 N. Sheflin NOTE:...

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1 I n t r o M a c r o N . S h e f l i n Assignment 9 NOTE : More on the Long-Run/Classical Model – focusing on the role and determinants of Saving, Investment and the Financial System; A look at the Federal Budget, Deficit, and Debt; An Intro to Econometrics and Estimating a Consumption function; And Unemployment and wages. Some more advice. Investment Game, Round 3 due – Mutual Funds. And Round 4 – look at- Bonds. FINAL EXAM - in class Thursday, July 2, 2009. First 30 minutes – Q&A session, then 15 minute break, then 2 hours and 15 minutes for final. Final Exam – 600 points - 75 multiple choice and 50 written ‘fill-in’ questions both drawn from the homework and weekly quizzes. No surprises, except for how much material we have covered. Review Guide and Essential Questions KEY POINTS Role of the Financial System o channel resources from savers to investors in productive capital o a word on interest Direct finance: new issues of stocks, bonds, etc to raise financial capital for corporate use o Stocks o Bonds o Mutual funds Financial Intermediaries – act as ‘middlemen’ in the process, borrowing from the public and lending to business, in the process converting the term or risk o Banks, Mutual Funds, etc Loanable Funds Theory of long-term real interest rate determination o the real interest rate is what one earns by lending or pays by borrowing funds, in terms of what it can buy; Thus, 5% nominal interest rate means that one gets (or pays0 5% more dollars. 5% real interest rate means that one gets (or pays0 5% more goods and services. o
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sumassign9 - 1 Intro Macro Assignment 9 N. Sheflin NOTE:...

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