ECON 3320
Exam #1 Review

1.            What is the role of money?  What is the Cambridge k?  What is the equation of exchange? How are these the same?  Different? What does each have to offer?

2.            What is the difference between coupon rate, current yield and yield to maturity?  How is present value used?  What is a zero? What is a consol?

3.            What is the term structure of interest rates?  How can it (the yield curve) be explained?

4.            What was the classical theory of interest?  How does it differ from Keynesian viewpoint?

5.            What would the role of money be in a classical vs. Keynesian model?  What is the implication for policy?

6.            What was the classical view of equilibrium?  On what is the model based?  How does this compare with the Keynesian viewpoint?

7.            Who are the monetarists?  What do they believe?

8.            What are real and nominal interest rates?  What relationship do they tend to have?

9.            What is the multiplier?  What can cause it to change?  What impact does it have on the economy?

10.        How is liquidity preference and liquidity trap a part of the Keynesian model?  What role does this approach to the demand for money play?

11.        What is the IS curve?

12.        What is the LM curve?

13.        How can these curves be used?

14.        What impacts these curves?

15.        What interactions may occur in the economy and what effects may they have?

16.        What are the issues and debates in monetary policy today?

17.        Other terms:

            Natural rate of i                                                            Rational expectations
            Crowding out                                                               Wealth effect
            Full employment                                                           Real balance effect
            Price flexibility                                                              Speculative demand for money
            Phillips curve