ECON 1150 Study Guide - Final Guide: Money Supply, Unemployment, Equilibrium Point
8 Jul 2016
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Perfect capital mobility = no restrictions on international trade in assets. Domestic and foreign brands have same effect, perfect capital mobility (economy is small which can"t affect r) Increase in g, decrease in t, decreases savings. The relative price of domestic goods in terms of foreign goods (big mac index) = e * p/p* (p* = foreign price) Increase in means us goods have become more expensive relative to foreign goods. Net exports function = predicts inverse relationshoip between nx and . A doctorine that states goods must sell at the same price in all countries. Nominal exchange rate adjusts to equalize cost of basket of goods across countries. International arbitrage isn"t possible and different countries" goods aren"t perfect substitutes. Natural rate of unemployment = average rate of unemployment around which the economy fluctuates. Caused by the time it takes workers to search for a job. Workers have different abilities and geographic motilities, jobs have different skill requirements.
