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mid2m11 - Second challenge Review Eco 212 Summer 2010 The...

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Unformatted text preview: Second challenge: Review Eco 212: Summer 2010 The challenge is closed book/notes. Good luck! M MB = k + 1 k + rrr , MV = PY, money multiplier = k + 1 k + rrr , Δ M = multiplier · Δ MB k = CU D , BR = rrrD, M = CU + D, MB = CU + BR, M = ( k + 1) D NFI = outflows- inflows = X- M = net exports , S = I + X- M, e = P · E P f growth rate Y = 1 3 growth rate K + 2 3 growth rate, N + g T growth rate, Y/N = 1 3 growth rate, K/N + g T contribution, T = g T growth rate, Y/N contribution, K/N = 1 3 · growth rate, K/N growth rate, Y/N 1 Short answer questions (1-3 sentences) Question 1 (8 points). Suppose the price of gold is 3000 Yen per ounce in Japan. Suppose further that nominal exchange rate is equal to 5. a. Assuming gold is identical in the US and Japan, what would you expect the dollar price of gold in the US to be? b. If the actual price of gold in $1000 per ounce in the US, is the dollar over or under valued relative to the yen? Explain....
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mid2m11 - Second challenge Review Eco 212 Summer 2010 The...

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