FINAL Flashcards
four things that make supply/demand move
change in relative inflation
change in tastes and preferences
productivity of capital
trade barriers
change in relative inflation
prices become more expensive
-more likely to want to buy US goods because they look cheaper
change in tastes and preferences
prefer something else from a different country
productivity of capital
how much you are able to earn by investing in real assets
trade barriers
tariffs, quotas
what countries do to manage exchange rates
currency board
fixed exchange rates
pegged
floating
currency board
gov’t institution - will only issue new currency if theres a particular currency coming in
fixed exchange rates
gov’t declares what the exchange rate is
pegged
fix exchange rate with one currency
floating
lets the market decide
advantages of coordinated monetary policy
1) reduces externalities- could work together
2) internal political pressure- would keep politicians out
disadvantages of coordinated monetary policy
1) loss of control- do not want to suffer to benefit everyone else
2) cheating- we will be the only ones to follow the rules then get screwed
3) worsens discretionary- introduces a brand new source of lag
bands
everyone related by blood
four problems to solve when population increased
1) conflict resolution - police to protect
2) decisions - chief to make decisions
3) surplus - economic decision
4) resources - economic decision
order of population
1) bands
2) tribes/ clans
3) chiefdom
4) states
