Questions

These questions pertain to yesterday's lecture (Sept. 23):

Here is some of the recent money supply data (the link is from last semester). Note the spike in M from 2002 to 2004. (The money supply increased by over $1 trillion.) How much of this explains price index movements today?

Explain the four money aggregates discussed in class today. How are they related to each other in terms of liquidity? If I take money from a checkable deposit account to a super NOW account, how does M1 change? How does M2 change?

What is the quantity equation, and how was it transformed into the quantity theory of money? Define the quantity theory of money. Why is it considered to be important for the theory that velocity is constant? How did Irving Fisher argue that velocity was constant?

This Niall Ferguson article on Milton Friedman was written shortly after Friedman died a few years ago. Ferguson discusses the significance of Friedman's aphorism, "Money is always and everywhere a monetary phenomenon."

Define seigniorage. Who receives it? How much of the U.S. federal government is financed in this manner, compared to (say) Italy and Greece? (See p. 90 of the Mankiw text.) How does this practice result in an inflation tax?

An incomplete review list:

Define micro, macro. Where does macro come from?
What are the Macro schools of thought discussed on the first day?
What are exogenous and endogenous variables?
Flexible and sticky?
GDP: Define, how is it measured, what are its components? Real and nominal? GDP Deflator? Chained measures? GDP and GNP?
The CPI: What is it? How is it measured? Problems with the CPI? Laspeyres and Paasche indices?
Unemployment: What is it, how is it measured? What is the natural rate?
The basic classical model: How do firms determine their level of production? Where do they access the factors of production? How do households consume and save? What is the role of investment and government spending? What brings the demand and supply of goods and services into balance?
Constant returns? Increasing returns?
How is national income distributed to the factors of production? What is the role played by the mpl and the mpk?
What effect did the Black Death in medieval Europe play on mpl and mpk?
What determines demand for goods and services?
What is the Broken Window fallacy?
What brings the supply and demand for goods and services into equilibrium? (Say, say, say?)
Explain leakages and injections.
Explain national savings,m private savings, and public savings.
How does fiscal policy (G and T) affect saving? Wars? Why does how G is financed (debt? taxes?) matter?
What is money and what are its functions?
Where does money come from? (I.e., how does it emerge from barter?)
Why were goldsmiths the first banks? How did central banking come about?
How is money measured? Why is money measured?
What is the quantity equation and the quantity theory of money? Why was it important to establish that V is constant?
Who was Irving Fisher and how did his institutional argument support that V was constant? What contribution did Milton Friedman make in this area?