Class notes
Unit 17: The Great depression, Golden age and Golden Financial crisis lecture notes
Lecture notes of Unit 17: The Great depression, Golden age and Golden Financial crisis
[Show more]
Connected book
Book Title:
Author(s):
- Edition:
- ISBN:
- Edition:
Seller
Follow
Content preview
Unit 17: The Great Depression,Golden Age and Global Financial
Crisis
Introduction
Good policies and institutions can promote economic growth and stabilize the economy
during a recession.
Major recessions and slowdowns in growth are due to policy and institutional failure.
Three economic epochs of the last century:
- the Great Depression
- the Golden Age
- the Financial Crisis
The three economic epochs
International comparisons
The three epochs of modern capitalism were worldwide phenomena, but some countries
experienced them differently compared to the US.
, Introduction
The Implication of openness is that economies become linked.
Three distinct dimensions:
- Openness in goods markets
- Openness in financial markets
- Openness in factor markets
Measure of openness
- Imports/GDP
- Exports/GDP
- Average of the ratios of exports and imports to GDP.
The higher the ratio → more open an economy is.
The choice between Domestic goods and Foreign Goods
When goods markets are open, domestic consumers must decide on:
- How much to consume and save
- whether to buy domestic goods or to buy foreign goods
→ effects on domestic output.
Central to the second decision is the price of domestic goods relative to foreign goods (the
real exchange rate) → not directly observable (nominal vs real)
Nominal exchange rates
Nominal exchange rate: It’s the price of one currency in terms of another or relative prices
of currencies.
Quote: Nominal exchange rates between two currencies can be quoted in one of two ways:
- Price of foreign currency in terms of the domestic currency.
Example: Dollar in terms of Rand (US $1 = R15,26)
- Price of domestic currency in terms of the foreign currency.
Example: Rand in terms of Dollars (R1 = US $0.07)
Both definitions refer to the same
1
Definition A=
Definition B
The most important thing is to remain consistent.
*Adopt the second definition.
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through EFT, credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying this summary from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller claudiacloete112. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy this summary for R50,00. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
61001 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy summaries for 14 years now