Essay about Study Guide

Submitted By briannehart
Words: 409
Pages: 2

Principles of Macroeconomics Exam Three Study Guide Chapter 2: What is a PPF? Why are some PPF’s ‘bowed out’? What does a ‘straight’ PPF imply? Identify inefficient, efficient and unattainable points on a PPF. How do we demonstrate economic growth/technological change on a PPF? Define: absolute advantage, comparative advantage, specialization. Can you solve for comparative advantage? Based on CA figures, can you specify a price range that will be agreeable to both parties? Does every country have a comparative advantage in some activity? Explain. How should countries identify activities that they should specialize in?. Chapter 29: What is the difference between open and closed economies? What is the balance of payments (be sure to mention the current account, capital account, financial account)? Define net foreign investment (NFI). Why is the balance of payments always equal to zero? Define nominal exchange rate and real exchange rate. Can you calculate real exchange rates? Demonstrate the market for foreign exchange using a supply and demand diagram. What could cause these curves to shift? What does it mean when a currency appreciates? Depreciates? Are all exchange rates set by markets? Explain. Be sure that you can derive an equation that relates NFI to NX. How can a budget deficit affect NX and NFI? What are the twin deficits? Why is the US the world’s largest debtor? Is this a problem? Explain why or why not (p. 1022). Explain how the impact of monetary and fiscal policy are affected by international trade. Chapter 30: What is an exchange rate? How are floating and fixed exchanges…