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ec10final - 2010 Final M/c 1B,3C,5B 14D 16A 19D 22B 30D 32D...

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2010 Final M/c 1B,3C,5B, 14D , 16A, 19D, 22B, 30D, 32D, 35B Review notes Put option—sell an item at a designated strike price Read “The Nation In Depression” IS-LM model explains Keyne’s theory of Aggregate demand As price level rises- the value of money falls and people want more of it 14D—expected means equilibrium and look at the graph closely Read—is “2007 US sub-prime financial crisis so different” IF net capital outflow is negative—then American assets bought by foreigners are higher than foreign assets bought by Americans! Foreign price level or domestic price level is the nominal interest rate! Those who worked as unpaid workers in a family member’s business are counted as employed! The CPI does not survey sellers to determine what a typical consumer buys The value of a stock is based on the present value of income streams and final price! Short Answers Bluebook A Review question 2 Bluebook B Review Question 1—what is the sacrifice ratio Review Question 2-tri-fecta studying! Bluebook C Question 1—look over but very easy Question 2—covers Okun’s law—review but easy Bluebook D Question 1 Review Problems M/c 6A, 11D, 16B, 18B, 19d, 20D, 23A, 26C, 28D, 29C, 31B, 32D, 35B, Review Notes Short answers—Review notes! Readings Bernanke-The Logic of Monetary Spending
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- the anology of the accelerator or break for the driving the Us economy— hard to predict current state and future predictions of the economy and fed not omniscient - 2 opposing theories—feedback policy says that the federal funds rate should react to easy measurable macroeconomic variables like unemployment and inflation while the “forecast based policy” focuses on how the economy will react to policies rather than waiting for the variables to need alteration—it’s a more proactive stance - The Fed will not back one or the other—the debate is lively and the members are using both to guide policy - forecast based policy supported by Greenspan citing preemption, structural changes and management risks - flexibility and communication key The Nation in Depression This paper examines the ways in which the U.S. experience during the 1930s resembled that of other countries in some regards, and fundamentally differed in other aspects. I also evaluate the evidence on the causes of the Great Depression in the United States and the sources of the eventual recovery.
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