Download Economics 2 Spring 2015 Unit 2 Study Guide Chapters 5, 6, 7, and 9

Economics 2 Spring 2015
Unit 2 Study Guide
Chapters 5, 6, 7, and 9
All page numbers and section headings are for the PDF download version of the textbook.
Italicized sections are independent reading sections and are not covered in the lecture, but will
be on the test.
What I expect you to know for the test:
Chapter 5 – Introduction, pages 109-110.
- The 3 main ways to judge if the macroeconomy is doing well or not: Slides 1-5 and
Introduction, pages 109-111
- Business Cycles and Intro. To GDP and Real GDP: Sections 1.0,1.1,1.2 pages 109-114.
- Measuring inflation, the Consumer Price Index and the Implicit Price Deflator: Slides 6-14 and
Sections 2.0,2.1,2.2,2.3,2.4, pages 117-124.
- Measuring the unemployment rate and the 3 types of unemployment: Slides 15-22 and Sections
3.0,3.1,3.2, pages 125-130.
Chapter 6 – Introduction, pages 137-138.
- How to calculate Nominal GDP: Slides 24-25 and not in the book.
- The 4 Main Components of GDP: Slides 26-27 and Sections 1.0,1.1, pages 138-142.
- What is not counted in GDP: Slide 28 and Sections 1.2, 3.2, pages 142-143, 152-153.
- What is the difference between GDP and GNP: Section 1.3, pages 143-144.
- Problems with GDP: Sections 3.0,3.1, pages 151-152.
- The Circular Flow Diagram model of the macroeconomy: Slides 32-36 and Section 1.1, pages
138-142.
- Price changes and the problem with using GDP to measure output changes over time: Slides
37-40 and Section 3.0, page 151.
- How to calculate Real GDP: Slides 41-44 and not in book.
- Implicit Price Deflator: Slides 45-48 and earlier introduced in Chapter 5, Section 2.2, page 121.
- GDP, GDP per capita, and international comparisons: Section 3.3, pages 153-154.
- Looking at the actual U.S. economy: Slides 49-50
Chapter 7 – Introduction, page 161.
- The Aggregate Demand Curve and the 3 reasons it slopes down: Slides 51-78 and Sections
1.0,1.1, pages 162-163.
- Factors that shift the AD curve: Slides 79-82 and Section 1.2, pages 164-167.
- The Multiplier: Slides 83-90 and Section 1.2, pages 164-167.
- The Long-Run Aggregate Supply Curve: Slides 94-103 and Section 2.1, pages 168-170.
- The Short-Run Aggregate Supply Curve: Slides 104-113 and Section 2.2, pages 170-173.
- Things that cause the SRAS curve to shift: Slides 114-115 and Section 2.2, pages 170-173.
- Macroeconomic Equilibrium in the short-run: Slides 116-120 and Section 2.2, pages 173-175.
- Natural Rate of Unemployment, Natural Real GDP, and wages: Slides 124-132 and Sections
3.0,3.1,3.2, pages 177-180.
- The Long-Run Equilibrium: Slides 133-137 and Sections 3.0,3.1,3.2, pages 177-180.
- Putting the short-run and long-run together: Slides 138-156 and Section 3.2, pages 178-180.
- Expansionary, Contractionary, and Nonintervention Policies: Section 3.3, pages 180-184.
Chapter 9 – Introduction, page 213.
- Where does money come from? Barter and double coincidence of wants: Slides 158-161 and
Sections 1.0, page 214.
- The 3 Functions of Money: Slide 162 and Section 1.1, pages 214-215.
- The Types of Money and what gives money its value: Slides 163-180 and Section 1.2, pages
215-216.
- Measuring M1 and M2: Slides 184-187 and Section 1.3, pages 216-219.
- Banks as Financial Intermediaries: Slide 188 and Sections 2.0,2.1, pages 220.
- Fractional Reserve Banking and Money Supply Growth: Slides 189-199 and Sections 2.2,2.3,
pages 220-224.
- The Deposit Multiplier: Slide 200 and Section 2.4, pages 224-225.
- Bank Runs and Regulation: Slides 201-204 and Section 2.5, pages 225-227.
- Structure of Fed: Slides 205-207 and Sections 3.0,3.1, pages 228-229.
- 3 Ways the Fed controls the Money Supply: Slides 211-239 and Section 3.2, pages 230-233.
Sections not covered and not on the test.
Chapter 5: None.
Chapter 6: 2.0, 2.1, 2.2.
Chapter 7: None.
Chapter 9: None
House of Representatives Hearing – July 13, 2011 – Congressman Ron Paul questions Federal
Reserve Chairman Ben Bernanke
Ron Paul: Do you think gold is money?
Ben Bernanke: No.
Paul: Even if it has been money for 6,000 years? Somebody reversed and eliminated that
economic law?
Bernanke: It’s an asset. Would you say treasury bills are money? I don’t think they are money
either, but they are a financial asset.
Paul: Why do central banks hold it?
Bernanke: It’s a form of reserves.
Paul: Why don’t they hold diamonds?
Bernanke: It’s tradition.