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Transcript
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 • • • • • • Purchasing power parity Big Mac currencies Valuation of Chinese currency Readings for chapter 18 Interest rate parity. Central Bank intervention to control exchange rates.