Unformatted text preview: of money. Be able to connect the FED’s operations to this framework. Understand the quantity theory of money and the quantity equation, along with the discussion of velocity and growth in real GDP (Mankiw’s principle #9). Chapter 13 Know what exports, imports and net exports are. Be clear about why net exports must equal net capital flows. Discern the difference between foreign direct investment and foreign portfolio investment, with their tie to net capital outflows. Know how to calculate real exchange rates and nominal exchange rates, and understand the relationship between them. Be clear about purchasing power parity, the law of one price, and currency appreciation and depreciation. Chapter 14 Understand the three panel diagram to determine the real interest rate and the real exchange rate simultaneously. Study and review the three problems in the chapter: budget deficits, trade policies and capital flight....
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This note was uploaded on 01/18/2012 for the course ECO 202 taught by Professor Normmiller during the Spring '08 term at Miami University.
- Spring '08