1. How do economists integrate the international sector (exports and imports) into the aggregate expenditures model?
2. How do economists integrate the public sector (government expenditures and taxes) into the aggregate expenditures model?
3. Why is the U.S. banking system called a “fractional reserve” system?
4. How can a bank create money?
5. The fractional reserve system allows banks to loan out excess reserves. This is how banks make profits! I would like to point out that this is how banking has worked for thousands of years. Can you find a historical example of the fractional reserve system?
6. What are the key facts about international trade?
7. How do differences between world prices and domestic prices prompt exports and imports?
8. I’d like for you all to use your economic knowledge to think about how international trade affects different groups of people. When a country imports an item, what happens to the price, domestically? How does this affect consumers? How does this affect domestic producers?
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