Assignment:
1. The Aggregate Expenditures Model
Consider the following as you read:
• How do economists integrate the international sector (exports and imports) into the aggregate expenditures model?
• How do economists integrate the public sector (government expenditures and taxes) into the aggregate expenditures model?
2. Money Creation
Consider the following as you read:
•Why is the U.S. banking system called a "fractional reserve" system?
• How can a bank create money?
3. Interest Rates and Monetary Policy
Consider the following as you read:
• How is the equilibrium interest rate determined in the market for money?
• What are the goals and tools of monetary policy?
4. International Trade
Consider the following as you read:
• What are the key facts about international trade?
• How do differences between world prices and domestic prices prompt exports and imports?