PCM
ECON 2301 MACROECONOMICS
Chapter 14
Below you will find the learning objective, concept, idea, term,
or theory that each question on the exam will cover. The numbers in the list
refer to the question number on Exam 4 that will test your knowledge of that
specific learning objective. Each of these topics/learning objectives is
discussed in the textbook in the order that they are listed below. A much better understanding can often be attained by
working through the "active graphs" and "smart graphs"
connected to many of these objectives in the online material.
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After reading Chapter 14, you should be able to:
- Distinguish between an expansionary and contractionary
monetary policy.
- Discuss the three motives for holding money.
- Know the structure of the money market.
- Describe the money market adjustment to the equilibrium
interest rate.
- Explain the equation of exchange.
- Discuss the role of the quantity theory in the conduct of
monetary policy.
- Discuss the monetarist school of thought and its implications
for monetary policy.
- Discuss the various complications of monetary policy.
- Interpret the relationship between monetary policy and
interest rates.
- Address the importance of central banks staying independent of
political pressures.
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