Purdue Econ 252 Final Already Passed

Flexible (floating) exchange rate {Ans: The government does not intervene in the foreign exchange market}Net factor payments from foreigners equation {Ans: (Factor payments from foreigners) - (Factor payments to foreigners) Factor payments are the income people receive for supplying the factors of production: land, labor, capital, or entrepreneurship}Interest rate on bonds equation {Ans: (Coupon the bond pays Interest Rate on bonds / Price of the Bond) - 1}National income account identity / Net capital outflows {Ans: S (Exports) - I (imports) = net exports = net capital outflows}Nominal exchange rate {Ans: the price of another (foreign) country's currency in units of one (domestic) country's currency Units of domestic currency/1 Unit of foreign currency 1/e When a nominal exchange rate rises, we say that the domestic currency is appreciating When a nominal exchange rate falls, we say that the domestic currency is depreciating}Properties of economic fluctuations {Ans: 1) Co-movement in economic aggregates 2) Limited predictability 3) Persistence in the rate of growth The Great Depression of 1929‒1933 illustrates the three key properties of economic fluctuations}REAL = NOMINAL - INFLATION {Ans: REAL = NOMINAL - INFLATION}Marginal product of labor {Ans: When output price rises,