Download ECON2012: MACROECONOMICS Review #2 Chapter 5 Definitions

ECON2012: MACROECONOMICS
Review #2
Chapter 5
Definitions
Price Ceiling
Price floor
Minimum wage
Excise tax
Tariff
Quota
Be Able To:
Describe and show graphically the effects of price ceilings and price floors.
Describe and show graphically the effect of an excise tax on a product.
Explain some of the negative side effects of a price ceiling
Discuss some of the issues of price ceilings in Venezuela
Rent Control
Chapter 6
Definitions:
Recession
Economic Growth
Leading Economics Indicators
Target Unemployment Rate Discouraged Workers
Labor Force Participation Rate
Frictional Unemployment
Structural Unemployment
Inflation
Price Index
PPI
Hyperinflation
Nominal income
Real GDP
Business Cycles
Unemployment Rate
Underemployment
Potential Output
Cyclical Unemployment
CPI
Real income
Nominal GDP
Be Able To:
1. Explain the differences and relationship between Economic Growth and Business cycles.
2. Explain and differentiate between cases of Frictional, Structural and Cyclical unemployment. What
policies might be used to reduce each type of unemployment.
3. Calculate an unemployment rate from appropriate data and explain what it means. Be able to also
calculate a labor force participation rate and explain what it means.
4. What are the shortcomings with the unemployment rate? What things may not be accounted for
correctly?
5. Calculate a price index. Explain its meaning, and use it to compare values across years.
6. What are the shortcomings (biases) of using a price index to measure price changes?
Chapter 7
Definitions:
Gross Domestic Product
Nominal GDP
Gross National Product
Final Products
Real GDP
Intermediate Products
Be Able To:
1. Explain the difference between GDP and GNP. Identify whether a specific type of production is
included in GDP and/or GNP.
2. Explain how GDP is calculated using the expenditure approach and the income approach.
Explain the equation GDP = C + I + G + X - M
3. Discuss the limitations of GDP as a measure of welfare and to compare standard of living across
countries.
Chapter 8
Definitions:
Economic Growth
Human Capital
Entrepreneurship
Specialization
Malthus’ positive checks
Per Capita Growth
Physical Capital
Production Function
Division of Labor
Technology
Productivity
Social Capital
Diminishing Marginal Productivity
Say’s Law
Be Able To:
1. Explain factors that lead to economic growth.
2. Give examples of policies that would increase economic growth
3. Compare the standard (classical) growth theory with the new growth theory.
Chapter 9 " WE PROBABLY WON’T GET TO THIS UNTIL AFTER EXAM # 2
Definitions:
Classical economists
Keynesian economists
Short-run Aggregate Supply Long-run Aggregate Supply
potential income
inflationary gap
Fiscal Policy
Aggregate Demand
equilibrium income
recessionary gap
Be Able To:
1. Explain what a classical economist would say is the correct policy if the economy is temporarily
experiencing unemployment.
2. Discuss why classical economics was not favored during the depression and why Keynesian
economics gained popularity.
3. Draw an Aggregate Demand Curve. Discuss what will cause the AD curve to shift. (i.e. Remember
AD = C + I + G + (X - M).
4. Explain why the Short-run Aggregate Supply (SAS) curve is shaped as it is and what will cause it to
shift.
5. Explain why the Long-run Aggregate Supply (LAS) curve is shaped as it is and what will cause it to
shift.
6. Explain how fiscal policy works. What problems emerge when trying to implement fiscal policy?