Download Study Tips for Final

Study Tips for Final
•Approximately 1/3 of questions from Ch.
14-18.
•Ch. 18 & supplemental readings will
account for approximately 1/5 of
questions.
•Complete Myeconlab and supplemental
problems for chapter 18.
• Review old midterm exams and quizzes.
– review related material, not just the
particulars of a question.
Important Topics
• GDP
– Real versus nominal
– Deflator
– Shortcomings as measure of standard of
living
– Expenditure and income side
– Components of expenditure side
Important Topics
• CPI
– Calculating
– Interpretation
– biases
• Real versus nominal variables
– e.g. real vs. nominal wages;
• Calculating growth rates
Important Topics
• Labor force statistics
– Unemployment rate, labor force participation
– Interpretation & calculation
• The long run model of the economy.
– The labor market
– The production function
– Interpreting effects of “shocks” on
• Real wages, employment, real GDP, productivity
Important Topics
• Labor force statistics
– Unemployment rate, labor force participation
– Interpretation & calculation
• The long run model of the economy.
– The labor market
– The production function
– Interpreting effects of “shocks” on
• Real wages, employment, real GDP, productivity
Important Topics
• Determinants of interest rates
– Investment demand (loan demand)
– Savings (loan supply)
– Effects of “shocks” on interest rates, savings,
investment.
• Gross vs. net investment (depreciation)
• Nominal versus real interest rates
Important Topics
• Factors shifting LRAS
• Supply side economics & policies
• The AD/AS model
– Factors shifting AD
– SR & LR effect of “shocks” on economic variables
(real & nominal wages, employment, prices, real &
nominal GDP, unemployment)
– Unemployment vs natural rate of unemployment
– Determining direction of wage pressure in economy.
Important Topics
• Federal Reserve
– Tools for controlling money supply
– Money supply definitions (M1, M2, monetary base,
reserves,
– Using balance sheets to calculate effect of shocks or
Fed actions on money supply
– Effect of Fed actions on interest rates & AD
• Bonds
– Calculating yields
– Indexed vs. non-indexed
– Prices & yields move in opposite directions
Important Topics
• Yield curve
– Interpretation
– Sources of changes
– “inverted” yield curve
• Phillips curve
– SR vs LR
– Source of trade-off between inflation & unemployment
– Source of shifts in SRPC (inflation expectations)
Important Topics
• Laffer Curve
• Effect of government deficits on economy
– Crowding out
– Current account deficit
– Ricardo-Barro effects
• Structural, cyclical and actual government
budget
• Automatic stabilizers
Important Topics
• Balance of Payments
– Current account & capital account
– Borrower or lender?
– Creditor or debtor?
• Determinants of exchange rates
– Supply & demand for $
• Using exchange rates to estimate cost of a
commodity in a different currency
Important Topics
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Purchasing power parity
Big Mac currencies
Valuation of Chinese currency
Readings for chapter 18
Interest rate parity.
Central Bank intervention to control
exchange rates.