The money market LM curve The theory of liquidity preference

Definition Inflation The overall increase in prices Hyperinflation: extraordinary high inflation

Topics Finish the assignment from last class Clarification for 4 questions from last class Demand for goods and services Equilibrium and the interest rate

Money Supply 100%-reserve banking Fractional-reserve banking

Investment Business fixed investment Equipment and structures that businesses buy to use in production Residential investment New housing that people buy to live in and that landlords buy to rent out Inventory investment Goods that business put aside in storage, including materials and supplies, work in process, and finished goods

The Open Economy in the SR The Mundell-Fleming Model Model under floating ex-rate Model under fixed ex-rate Interest-rate- differentials Debate over floating v.s. fixed ex-rate Mundell-Fleming model with changing price level Model in large open economy

The Open Economy Why do countries trade with each other? \No nation was ever ruined by trade.\ -- Benjamin Franklin More varieties; higher quality; cheaper price

The Macroeconomic Policy Debate William McChesney Martin The fed.'s job is to take away the punch bowl just as the party gets going 联储的工作是在宴会进行时拿走盛满酒的酒杯。 The economy is inherently unstable

The Multiplier Process as Market Exchange Process A Contribution to the micro Foundation of Keynesian macroeconomics Abstract Traditional equilibrium analysis has been incorrectly founded once an\ordering issue\is

What is economics? Normative Definition Economics is the science that studies how to efficiently allocate economic resources Positive definition economics is the science that studies how an economy operates or how economic variables are