ECON 101 Lecture Notes - Lecture 11: Canadian Dollar, Arbitrage, Mexican Peso
Document Summary
Discount rate: cost of short-term borrowing from fed (purpose to make more loans) Open market operations: buying and selling bonds of the open market: to increase money supply, more excess reserve = more loans, threaten to lower reserve or discount rate. Debt ceiling: total dollars of bonds allowed to be in circulation. One of the ten principles of economics from ch. 1: trade can make everyone better off. This chapter introduces basic concepts of international macroeconomics: the trade balance (trade deficits and surpluses) Net exports (nx) aka the trade balance: = value of exports -value of imports. Consumers preferences for foreign and domestic goods. Price of goods at home and abroad. The exchange rates at which foreign currency trades for domestic currency. Nx (cid:373)easures the i(cid:373)(cid:271)ala(cid:374)(cid:272)e i(cid:374) a (cid:272)ou(cid:374)try"s trade i(cid:374) goods a(cid:374)d ser(cid:448)i(cid:272)es. Trade deficit: an excess of imports over exports, buy more foreign good than they buy of yours. Trade surplus: an excess of exports over imports.
