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

Microeconomics behind Macroeconomics Consumption Investment Money and Advances in business cycle model

Interest-Rate Differentials Country risk&ex -rate- expectations Country risk Political upheaval default on loan repayments higher i-rate to compensate Ex-rate expectations expect RMB to appreciate loans in RMB can pay a lower i-rate

Effects of Policies on Real Ex--rate 1. Home fiscal policy (expansionary) →S→(S-)↓ → Domestic currency invested abroad↓ Domestic currency appreciates → Nominal ex--rate↑ → Real ex--rate↑(if prices do not change) Domestic goods become more expensive → Exports↓& imports↑

Government Debt Scale of govern. debt Is budget deficit correctly measured? Traditional view of govern. Debt Ricardian equivalence Other possible effects of govern. debt

Inflation, Unemployment, and the Phillips Curve Phillips Curve: relationship between inflation and unemployment A..Phillips (1958) \The relationship between unemployment and the rate of change of money wages in the united kingdom, 1861- 1957,\ Economica 25

第八章总需求函数(曲线)和总供给函数(曲线) 一、基本概念 总需求总需求函数总需求曲线总供给总供给函数总供给

一、概念 资本投资总投资净投资资本边际效率投资边际效率加速数加 速原理乘数一加速数模型合意资本存量贴现值法资本边际效率法