Troy University. STU Campus Macroeconomic Name: Nguyen Duc Anh ID: 1357057

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1. Chapter 1: Limit, Alternative and Choices

1.1. The economic Perpective

1.1.1. Scarcity and Choice Economists call such sacrifices opportunity costs: To obtain more of one thing, society forgoes the opportunity of getting the next best thing. That sacrifice is the opportunity cost of the choice.

1.1.2. Purposeful Behavior Economies assumes that human behavior reflects "rational self-interest." Individuals look for and pursue opportunities to increase their utility—the pleasure, happiness,or satisfaction obtained from consuming a good or service.

1.1.3. Marginal Analysis: Benefits and Costs The economic perspective focuses largely on marginal analysis—comparisons of marginal benefits and marginal costs, usually for decision making

1.2. Theories, Priciples and Models

1.3. Mircoeconomics and Macroeconomics

1.3.1. Microeconomics is the part of economics concerned with individual units such as a person, a household, a firm or industry.

1.3.2. Macroeconomics examines either the economiy as a whole or its basic subdivisions or aggregates, such as the government, household, and business sector.

1.3.3. Positive and Normative Economics Positive economics focuses on facts and cause-ad-effect relationships. Normative economics incorporates value judgments about what the economy should be like or what particular policy actions should be recommended to archieve a desirable goal.

1.4. Individuals' Economizing Problem

1.4.1. Limited Income

1.4.2. Unlimited Wants to pick and choose goods and services that maximize our satisfaction.

1.4.3. A Budget Line Attainalbe and Unattainable Combinatios Trade-Offs and Opportumity Costs Choice Income Changes

1.5. Society's Economizing Problem

1.5.1. Scarce Resources

1.5.2. Resource Categories Land Land means much more to the economist than it does to most people. To the economist land includes all natural resources (“gifts of nature”) used in the production process, such as arable land, forests, mineral and oil deposits, and w'ater resources. Labor The resource labor consists of the physical and mental talents of individuals used in producing goods and serv ices. The services of a logger, retail clerk, machinist, teacher, professional football player, and nuclear physicist all fall under the general heading “labor.” Capital For economists, capital (or capital goods) includes all manufactured aids used in producing consumer goods and services. Included are all factory, storage, transportation, and distribution facilities, as well as tools and machinery. Economists refer to the purchase of capital goods as investment. Entrepreneurial Ability The entrepreneur takes the initiative in combining the resources of land, labor, and capital to produce a good or a service. Both a sparkplug and a catalyst, the entrepreneur is the driving force behind production and the agent w'ho combines the other resources in what is hoped will be a successful business venture.

1.5.3. Law of Increasing Opportunity Costs Shape of the Curve Economic Rationable

1.5.4. Optimal Allocation

1.6. Unemployment, Growth and the Future

1.6.1. A Growing Economy Increases in Resource Supplies Advances in Technology

1.6.2. Present Choices and Future Possibilities

1.6.3. A Quanlification International Trade

2. Chapter 2: The Market System and the Circular Flow

2.1. Economic Systems

2.1.1. The Commands System

2.1.2. The Market System

2.2. Charateristics of the Market System

2.2.1. Private Property

2.2.2. Freedom of Enterprise and Choice Freedom of enterprise Freedom of choice

2.2.3. Self-Interest

2.2.4. Competion

2.2.5. Market and Prices

2.2.6. Technology and Capital Goods

2.2.7. Specialization Division of Labor Specialization make use of differences in ablity Specialization fosters learning by doing Specialization saves time Geographic Specialzation

2.2.8. Use of Money

2.2.9. Active, but Limited Govement

2.3. Five Fundamental Question

2.3.1. What Will be Produced?

2.3.2. How Will the Goods and Services Be Produced?

2.3.3. Who Will Get the Output?

2.3.4. How Will the System Accommodate Change?

2.3.5. How Will the System promote Progress? Technological Advance Capital Accumulation

2.4. The "Invisibla Hand"

2.4.1. Efficiency

2.4.2. Incentives

2.4.3. Freedom

2.5. The Demise of the Command Systems

2.5.1. The Coordination Problem

2.5.2. The Incentive Problem

2.6. The Cirular Flow Model

2.6.1. Resource Market

2.6.2. Product Market

3. Chapter 3: Demand, Supply and Market Equilibrium

3.1. Markets

3.2. Demand

3.2.1. Law of Demand

3.2.2. The Demand Curve

3.2.3. Market Demand

3.2.4. Change in Demand Tastes Number of Buyers Income Prices of Relate Goods Substitute good is one that can be used in place of another good. Complementery good is one that is used together with another good. Substitutes Complements Unrelates Goods Consumer Expectations

3.2.5. Chages in Quantity Demanded

3.3. Supply

3.3.1. Law of Supply

3.3.2. The Supply Curve

3.3.3. Market Supply

3.3.4. Determinants of Supply

3.3.5. Changes in Supply Resource Prices Technology Taxes and Subsidies Prices of Other Goods Producer Expectations Nunber of Seller

3.3.6. Changes in Quantity Supplied

3.4. Market Equilibrium

3.4.1. Equilibrium Price and Quantity

3.4.2. Rationing Function of Prices

3.4.3. Effcient Allcation

3.4.4. Changes in Supply, Demand and Equilibrium Changes in Demand Changes in Supply Comples Cases Supply Increase; Demand Decrease Supply Decrease; Demand Increase Supply Increase; Demand Increase Supply Decrease; Demand Decrease

3.5. Application: Government Set Prices

3.5.1. Price Ceilings on Gasonline Graphical Analysis Rationing Problem Black markets

3.5.2. Rent Controls

3.5.3. Price Floors on Wheat Graphical Analysis Additional Consequences

4. Chapter 4: The U.S Economy: Private and Public Sectors

4.1. Household as Income Receivers

4.1.1. The Functional Distribution of Income

4.1.2. The Personal Distribution of Income

4.2. Households as Spenders

4.2.1. Personal Taxes

4.2.2. Personal Saving

4.2.3. Personal Consumption Expenditures

4.3. The Business Population

4.3.1. Plant

4.3.2. Firm

4.3.3. Industry

4.4. Legal Forms of Businesses

4.4.1. Advantages of Corporation

4.4.2. The Pricipal-Agent Problem

4.5. The Public Sector: Government's Role

4.5.1. Providing the Legal Structure

4.5.2. Maintaning Competition

4.5.3. Redistributing Income Transfer payments market intervention Taxation

4.5.4. Reallocating Resources Externalities Negative Externalities Correcting for Negaive Externalities Positive Externalities Correcting for Positive Externalities Public Goods and Services Qusi-Public Goods The Reallocation Process

4.5.5. Promoting Stability Umemployment Inflation

4.5.6. Government's Role: A Qualification

4.6. The Circular Flow Revisiter

4.7. Government Finance

4.7.1. Government Purchases and Transfers Government purchases Transfer payments

4.8. Federal Finance

4.8.1. Federal Expenditures

4.8.2. Federal Tax Recenues Personal Income Tax Payroll Taxes Corporate Income Tax Excise Taxes

4.9. State and Local Finance

4.9.1. State Finances

4.9.2. Local Finances

5. Chapter 5: An Inroduction to Macroeconomics

5.1. Performance and Policy

5.1.1. Real GDP (real gross domestic product)

5.1.2. Unumployment

5.1.3. Inflation

5.2. The Mirecle of Modern Economic Growth

5.2.1. Saving, Investment and Choosing between Present and Future Consumption Saving Investment Financial investment Economic investment

5.2.2. Banks and Other Financial Institutions

5.3. Uncertainty, Expectations and Shocks

5.3.1. Demand Shocks and Flexibla prices

5.3.2. Demand Shock and Sticky Prices

5.4. How Sticky Are Prices?

5.5. Categorizing Macroeconomic Models using Price Stikiness

6. Chapter 6: measuring Domestic Output and national Income

6.1. Assessing the Economy's Performance

6.1.1. Nation income accounting

6.2. Gross Domestic Product

6.2.1. A Monetary Measure

6.2.2. Avoiding Multiple Counting

6.2.3. GDP Excludes Nonproduction Transactions Financial Transactions Public transfer payments Private transfer payments Stock market transactions Secondhand Sales

6.2.4. Two Ways of Looking at GDP: Spending and Income

6.3. The Expenditures Approach

6.3.1. Personal Consumption Expenditures

6.3.2. Gross Privative Domectic Investment Positive and Negative Change in Investories Noninvestment Transactions Gross Investment versus Net Investment

6.3.3. Government Purchases

6.3.4. Net Exports

6.3.5. Putting It All Together: GDP = C + Ig + G + Xn

6.4. The Income Approach

6.4.1. Compensation of Employees

6.4.2. Rent

6.4.3. Interest

6.4.4. Proprietors' Income

6.4.5. Corporate Profits Corporate income taxes Dividends Undistributed corporate profits

6.4.6. Taxes on Production and Imports

6.4.7. From National Income to GDP Net Foreign Factor Income Statistical Discrepancy Consumption of Fixed Capital

6.5. Other National Accounts

6.5.1. Net Domestic Product

6.5.2. National Income

6.5.3. Personal Income

6.5.4. Disposable Income

6.5.5. The Circular Flow Revisited

6.6. Nominal GDP versus Real GDP

6.6.1. Adjustent Process in a One-Product Economy GDP Price Index Dividing Nominal GDP by the Price Index

6.6.2. An Alternative Method

6.6.3. Real-World Considerations and Data

6.7. Shortcomings of GDP

6.7.1. Nonmarket Activities

6.7.2. Leisure

6.7.3. Improved Product Quality

6.7.4. The Underground Economy

6.7.5. GDP and the Environment

6.7.6. Composiion and Distrubution of Output

6.7.7. Noneconomic Sources of Well-being

7. Chapter 7: Economic Growth

7.1. Economic Growth

7.1.1. Growth as a Goal

7.1.2. Arithmetic of Growth

7.1.3. Growth in the Inuted States Improved product and services Added leisure Otber impact

7.2. Modern Economic Growth

7.2.1. The Unvem Distribution of Growth

7.2.2. Catching Ip Is Possible

7.3. Institutional Structures That Promote Growth

7.3.1. Strong property rights

7.3.2. Patents and copyrights

7.3.3. Afficient financial institutions

7.3.4. Literacy and widespread education

7.3.5. Free trade

7.3.6. A complotive market system

7.4. Ingredients of Growth

7.4.1. Supply factors

7.4.2. Demand Factor

7.4.3. Efficiency Factor

7.5. Production Possibilities Analysis

7.5.1. Growth and Producttion Possibilities

7.5.2. Labor and Productivity Hours of Work Labor Productivity

7.6. Accounting for Growth

7.6.1. Labor Inputs versus Labor Productivity

7.6.2. Technological Advance

7.6.3. Quantity Of Capital

7.6.4. Education and Training

7.6.5. Economies of Scale and Resource Allocation Economies of Scale Improved Resource Allocation

7.7. The Recent Produtiviy Acceleration

7.7.1. Reasons for the Productivity Thee Micrichip and Information Technology New Firms and Increasing Returns More specialzed inputs Spreading of development costs Simultaneous consumption Network effects Learning by doing Global Competition

7.7.2. Implication: More Rapid Economic Growth

7.7.3. Skepticism about Permanence

7.7.4. What Can We Cinclude?

7.8. is Growth Desirable and Sustainable?

7.8.1. The Antigrowth View

7.8.2. In Defense of Economic Growth

8. Chapter 8: Business Cycles, Unemployments and Inflation

8.1. The Business Cycle

8.1.1. Phases of the Business Cyccle Peak Recession Trough Expansion

8.1.2. Casation: A First Glance

8.1.3. Cyclical Impact: Durables and Nondurables

8.2. Unemployment

8.2.1. Measurement of Unemployment Part-time employment Discourraged workers

8.2.2. Types of Unemployment Frictional Unemployment Strutural Unemployment Cyclical Unemployment

8.2.3. Definition of Full Employment

8.2.4. Economic Cost of Unemployment GDP Gap and Okun's Law Unequal Burdens Occupation Age Race and etbnicity Gender Education Duration

8.2.5. Noneconomic Costs

8.2.6. International Comparions

8.3. Inflation

8.3.1. Meaning of Inflation

8.3.2. Measurement of Inflation

8.3.3. Facts of Inflation

8.3.4. Types of Inflation Denamd-Pull Inflation Cost-Push Inflation

8.3.5. Complexities

8.4. Redistribution Effects of inflation

8.4.1. Nominal and Real Income

8.4.2. Anticipations

8.4.3. Who Is Hurt by Inflation? Fixed-Income Receivers Savers Creditiors

8.4.4. Who Is Unaffected or helped by Inflation Flexible-Income Receivers Debtors

8.4.5. Anticipated Inflation

8.4.6. Other Redistribution Issues Deflation Mixed effcts Arbitrariness

8.5. Does Inflation Affect Output?

8.5.1. Cost-Push Inflation and Real Output

8.5.2. Demand-Pull Inflation and Real Output

8.5.3. Hyperinflation

9. Chapter 9: Basic Macroeconomic Relationship

9.1. The Income-Consumption and Income-Saving Relationship

9.1.1. The Consumption Schedule

9.1.2. The Saving Schedule

9.1.3. Average and Marginal Propensities

9.1.4. Nonincome Determinants of Consumption and Saving Wealth Borrowing Expectations Real Interest Rates

9.1.5. Other Important Considerations Switching to real GDP Changes along schedules Schedule shifts Taxation Stability

9.2. The Interest-Rate-Investment Relationship

9.2.1. Expected Rate of Return

9.2.2. The Real Interest Rate

9.2.3. Investment Demand Curve

9.2.4. Shifts of the Investment Demand Curve Acquisition , Maintenance and Operating Costs Business Taxes Technological Change Stock of Capital Goods on Hand Planned Inventory Changes Expectations

9.2.5. Instability of Investment Durability Irregularity of Innovation Variability of Profis Variability of Expectations

9.3. The Multiplier Effect

9.3.1. Rationale

9.3.2. The Multiplier and the Marginal Propensities

9.3.3. How Large Is the Actual Multiplier Effect?

10. Chapter 10: The Aggregate Expenditures Model

10.1. Assumptions and Simplifications

10.2. Consumption and Investment Schedules

10.3. Equilibrium GDP: C + lg = GDP

10.3.1. Tabular Analysis Quilibrium GDP Disequilibrium

10.3.2. Graphical Analysis

10.4. Other Features of Equilibrium GDP

10.4.1. Saving Equals Planned Investment

10.4.2. No Unplanned Changes in Inventories

10.5. Changes in Quilibrium GDP and the Multiplier

10.6. Adding International Trade

10.6.1. Net Exports and Aggregate Expenditures

10.6.2. The Net Export Schedule

10.6.3. Net Exports and Equilibrium GDP Positive Net Exports Negative Net Exports

10.6.4. International Economic Linkages Prosperity Abroad Tariffs Exchange Rates

10.7. Adding the Public Sector

10.7.1. Government Purchases and Equilibrium GDP Tabular Example Graphical Analysis

10.7.2. Taxation and Equilibrium GDP Tabular Example Graphical Analysis Differential Impacts Injections, Leakages and Unplanned Changes Inventories

10.8. Equilibrium versus Full-Employment GDP

10.8.1. Recessionary Expenditure Gap Keynes' Solution to a Recessionary Expenditure Gap

10.8.2. Inflationary Expenditure Gap

10.8.3. Application: The U.S Recession of 2001

10.8.4. Application: Full-Emploment Output with Large Negative Net Exports

11. Chapter 11: Aggregate Demand and Aggregate Supply

11.1. Aggregate Demand

11.1.1. Aggregate Demand Curve Real-Balances Effect Interest Rate-Effect Foreign Purchases Effect

11.2. Changes in Aggregate Demand

11.2.1. Consumer Spending Consumer Wealth Household Borrowing Consumer Expectations Peronal Taxes

11.2.2. Investment Spending Real Interest Rates Expected Returns Expectations about future business conditions Technology Degree of excess capacity Bisuness taxes

11.2.3. Government Spending

11.2.4. Net Export Spending National Income Abroad Exchange Rates

11.3. Aggregate Supply

11.3.1. Aggregate Supply in the Immediate Short Run

11.3.2. Aggregate Supply in the Short Run

11.3.3. Aggregate Supply in the Long Run

11.3.4. Focusing on the Short Run

11.4. Changes in Aggregate Supply

11.4.1. Input Prices Domestic Resource Prices Increases Decreases Prices of Imported Resources

11.4.2. Productivity

11.4.3. Legal-Institutional Environment Business taxes and Subsidies Government Regulation

11.5. Equilibrium and Changes in Equilibrium

11.5.1. Invrease in AD: Demand-Pull Inflation

11.5.2. Decreases in AD: Recession and Cyclical Unemployment Fear of price was Menu costs Wage contracts Morale, effort and productivity Minimum wage

11.5.3. Decreases in AS: Cost-Push Inflation

11.5.4. Increases in AS: Full Employment with Price-Level Stability

12. Chapter 12: Fiscal Policy, Deficits and Debt

12.1. Fiscal Policy and the AD-AS Model

12.1.1. Expansionary Fiscal Policy Increased Government Spending Tax Reductions Combined Government Spendng Increases and Tax Reductions

12.1.2. Contractionary Fiscal Policy Decreased Government Spending Increased Taxes Combined Government Spending Decreases and Tax Increases

12.1.3. Policy Options: G or T?

12.2. Built-In Stability

12.2.1. Automatic or Built-In Stabilizers Economic Importance Tax Progressivity

12.3. Evaluating Fiscal Policy

12.3.1. Standardized Budget

12.3.2. Recent U.S Fiscal Policy

12.3.3. Budget Deficits and Projections

12.3.4. Social Security Considerations

12.4. Problems, Criticisms and Complications

12.4.1. Problems of Timing Recognition lag Administrative lag Operational lag

12.4.2. Political Considertions

12.4.3. Future Policy Reversals

12.4.4. Offsetting State and Local Finance

12.4.5. Crowding-Out Effect

12.4.6. Current Thinking on Fiscal Policy

12.5. The Public Debt

12.5.1. Ownership

12.5.2. Debt and GDP

12.5.3. International Comparisons

12.5.4. Interset Charges

12.6. False Concerns

12.6.1. Bankruptcy Refinancing Taxation

12.6.2. Burdening Future Generations

12.7. Substantive Issues

12.7.1. Income Distribution

12.7.2. Incentives

12.7.3. Foreign-Owned Public Debt

12.7.4. Crowding-Out Effect Revisited A Graphical Look at Crowding Out Public Invesrments and Public-Private Complementarities

13. Chapter 13: Moneey and Banking

13.1. The Functions of Money

13.1.1. Medium of exchange

13.1.2. Unit of account

13.1.3. Store of value

13.2. The Components of the Money Supply

13.2.1. Money Definition M1 Currency: Coins + Paper Money Checkable Deposits Institutions That Offer Checkable Deposits Two Qualifications

13.2.2. Money Definition M2 Saving deposits, including money market deposit accounts Small (less than $100,000) time deposits Money market mutual funds beld by individuals

13.3. What "Backs" the Money Supply

13.3.1. Money as Debt

13.3.2. Value of Money Acceptability Legal Tender Relative Scarity

13.3.3. Money and Prices The Purchasing Power of the Dollar Inflation and Acceptability

13.3.4. Stabilizing Money's Purchasing Power

13.4. The Federal Reserve and the Banking System

13.4.1. Historical Backgound

13.4.2. Board of Governors

13.4.3. The 12 Federal Reserve Banks Central Bank Quasi-Public Banks Bankers' Banks

13.4.4. FOMC

13.4.5. Commercial Banks and Thrifts

13.4.6. Fed Functions and the Money Supply Issuing currency Setting reserve requirements and bolding reserves Lending money Providing for check collection Acting as Fiscal agent Supervising banks Controlling the money supply

13.4.7. Federal Reserve Independence

13.5. Recent Developments in Money and Banking

13.5.1. The Relative Decline of Banks and Thrifts

13.5.2. Consolidation among Banks and Thrifts

13.5.3. Convergence of Services Provided by Financial Institutions

13.5.4. Globalization of Financial Markets

13.5.5. Electronic Payments

14. Chapter 14: Money Creation

14.1. The Fractional Reserve System

14.1.1. Illustrating the Idea: The Goldsmiths

14.1.2. Significant Characteristics of Fractional Reserve Banking

14.2. A Single Commercial Bank

14.2.1. Transaction 1: Creating a Bank

14.2.2. Transaction 2: Acquiring Property and Equipment

14.2.3. Transaction 3: Accepting Deposits

14.2.4. Transaction 4: Deposting Reserves in a Federal Reserve Bank Excess Reserves Control Asset and Liability

14.2.5. Transaction 5: Clearing a Check Drawn against the Bank

14.3. Money-Creating Transactions of a Commercial Bank

14.3.1. Transaction 6: Granting a Loan

14.3.2. Transaction 7: Buying Government Securities

14.3.3. Profits, Liquidity and the Federal Funds Market Profit Liquidity

14.4. The Banking System: Multiple-Dposit Expansion

14.4.1. The Banking System's Lending Potential

14.4.2. The Monetary Multiplier

14.4.3. Reversibility: The Multiple Destruction of Money

15. Chapter 15: Interest Rates and Monetary Policy

15.1. Interest Rates

15.1.1. The Demand for Money Transactions Demand, Dt Asset Demand, Da Total Money Demand, Dm

15.1.2. The Equilibrium Interest Rate

15.1.3. Interest Rates and Bond Prices

15.2. The Consolidated Balance Sheet of the Federal Reserve Banks

15.2.1. Assets Securities Loans to Commercial Banks

15.2.2. Liabilities Reserves of Commercrial Banks Treasury Deposits Federal Reserve Notes Outstanding

15.3. Tools of Monetary Policy

15.3.1. Open-Market Operations Buying Securities From Commercial Banks From the Public Selling Securities To Commercial Banks To the Public

15.3.2. The Reserve Ratio Raising the Reserve Ratio Lowering the Reserve Ratio Changes the amount of excess reserve Changes the size of the monetary multiplier

15.3.3. The Discount Rate

15.3.4. Term Auction Facility

15.3.5. Relative Importance

15.4. Targeting the Federal Funds Rate

15.4.1. Expansionary Monetary Policy

15.4.2. Restrictive Monetary Policy

15.4.3. The Taylor Rule

15.5. Monettary Policy, Real GDP and the Price Level

15.5.1. Cause-Effect Chain Market for Money Investment Equilibrium GDP

15.5.2. Effects of a Expansionary Monetary Policy

15.5.3. Effects of a Restritive Monetary Policy

15.6. Monetary Policy: Evaluation and Issues

15.6.1. Recent U.S. Monetary Policy

15.6.2. Problems and Complications Lags Cyclical Asymmetry

15.7. The "Big Picture"

16. Chapter 16: Extending the Analysis of Aggregate Supply

16.1. From Short Run to Long Run

16.1.1. Short-Run Aggregate Supply

16.1.2. Long-Run Aggregate Supply

16.1.3. Long-Run Equilibrium in the AD-AS Model

16.2. Analysis the Extanded AD-AS Model

16.2.1. Demand-Pull Inflation in the Extended AD-AS Model

16.2.2. Cost-Push Inflation in the Extended AD-AS Model Analysis Policy Dilemma

16.2.3. Recession and the Extended AD-AS Model

16.2.4. Ongoing Inflation in the Extended AD-AS Model Economic Growth and Aggregate Supply Economic Growth in the Extended AD-AS Model

16.3. The Inflation-Unemployment Relationship

16.3.1. The Phillips Curve

16.3.2. Aggregate Supply Shocks and the Pillips Curve Adverse Aggregate Supply Shocks Stagflation's Demise

16.4. The Long-Run Phillips Curve

16.4.1. Short-Run Phillips Curve

16.4.2. Long-Run Vertical Phillips Curve

16.4.3. Disinflation

16.5. Taxaxtion and Aggregate Supply

16.5.1. Taxes and Incentives to Work

16.5.2. Incentives to Save and Invest

16.5.3. The Laffer Curve

16.5.4. Critisisms of the Laffer Curve Taxes, Incentives and Time Inflation or Hiher-Real Interest Rates Position on the Curve

16.5.5. Rebuttal and Evaluation

17. Chapter 17: The Balance of Payments, Exchange Rates and Trade Deficits

17.1. International Financial Transactions

17.1.1. Trading either goods or services for money

17.1.2. Trading assets for money

17.2. The Balance of Payments

17.2.1. Current Account Balance on Goods Balance on Services Balance on Current Account

17.2.2. Capital and Financial Account Capital Account Financial Account

17.2.3. Why the Balance of Payments Balances

17.2.4. Payments, Deficits and Surpluses

17.3. Flexible Exchange Rates

17.3.1. Flexile or floating exchange rate system

17.3.2. Fixed exchange rate system

17.3.3. Depreciation and Appreciation

17.3.4. Determinants of Exchange Rates Changes in Tastes Relative Income Changes Relative Price-Level Changes Relative Interest Rates Changes in Relative Expected Returns on Stocks, real Estate and Pruduction Facilities Speculation

17.3.5. Flexible Rates and the Balance of Payments

17.3.6. Disadvantages of Flexible Exchange Rates Uncertainty and Diminished Trade Terms-of-Trade Changes Instability

17.4. Fixed Exchange Rates

17.4.1. Use of Reserves

17.4.2. Trade Pilicies

17.4.3. Exchange Controls and Rationing Distored trade Favoritism Restricted choice Black markets

17.4.4. Domestic Macroeconomic Adjustments

17.5. The Current Exchange Rate System: The Managed Float

17.5.1. Insupport of the Managed Float

17.5.2. Concerns with the Managed Float

17.6. Recent U.S. Trade Deficits

17.6.1. Causes of the Trade Deficits

17.6.2. Implication of U.S. Trade Deficits increased Current Consumption Increased U.S. Indebtedness