ECON 203 (ECON101)

The notes cover Classical thought works by supply and demand, while Keynesian thought tends to involve set government prices. Classical thought tends to worry more about inflation issues, while Keynesian thought tends to worry more about unemployment issues

The document talks about The approaches are: 1. The Purchasing Power Parity Approach 2. The Balance of Payments and the Internal-External Balance Approach 3. The Monetary Approach

Keynesians believe fiscal and monetary policy should be used actively in the short run to manage aggregate demand. Neoclassicals believe that the economy is self-correcting, and attempting to fine-tune the economy through monetary and fiscal policies makes problems worse.

In this economy, inflation can impose only two real costs: the less efficient arrangement of transactions that result from holding smaller money balances and the necessity to change posted prices more frequently (the so-called menu costs).

Trading pattern. Long-range direction of a security or commodity futures price, charted by drawing one line connecting the highest prices the security has reached and another line connecting the lowest prices at which the security has traded over the same period.

An exchange rate system, also called a currency system, establishes the way in which the exchange rate is determined, i.e., the value of the domestic currency with respect to other currencies. Choosing the currency system is a pivotal element of the economic policy adopted by a country's government. The notes explains everything in great detail.

Summary. At the cornerstone of international finance relations, are the three international interest parity conditions, viz., the covered interest parity, the PPP doctrine and the international fisher effect.

Economic growth is the increase in the market value of an economy's commodities and services over time. The percentage rate change in real gross domestic product is used to calculate it (GDP). Long-run growth is described as an economy's ability to create more products and services over time. The document explains in depth about the concept and builds pillars of macro economics.

The documents explains the relationship between basic supply and demand principles. As inflation falls, so do interest rates. It becomes less expensive to borrow money, thus there's more money circulating in the economy. Since supply remains relatively constant, demand for goods and services increases—thus increasing prices and inflation.