Students are expected to read & understand their book & class notes. Students should also review the relevant questions contained on the comprehensive finals from the spring & fall of 1997. Here is a checklist containing most of the topics you should have mastered:

Review sheet may not be completely up-to-date until 2 days before the exam!

Chapter 6: Economic Growth, Business Cycles, Unemployment, and Inflation

• Circular flow diagram

• Consumer sovereignty and the significance of households

• Three Macro Goals: High Employment, Price-Level Stability, and Economic Growth

• Economic Growth: GDP, real GDP, Sources of Growth

• Business Cycles: Recessions, Expansions, Peak, Trough, Measuring

• Measuring Unemployment: Labor Force, Employed, Unemployed, Unemployment Rate, Working-age Civilian Population

• Full Employment, Target rate of unemployment

• Types of Unemployment: Frictional, Structural, and Cyclical

• Labor Supply and Labor Demand Diagram

• Reasons for Unemployment

• Underemployment, Discouraged Workers

• Costs and Benefits of Unemployment

• Inflation Indices: CPI, PPI, GDP deflator

• Real versus nominal

• Percentage Change Formula (calculating inflation between two years)

• Calculating Real Values

• Demand-pull inflation, Cost-push inflation, Expectational inflation

• Costs and Benefits of inflation

• Types of inflation: creeping, galloping, Hyperinflation

• Misery Index

Chapter 7: National Income Accounting

• Stock versus Flow Variables

• GDP vs. GNP

• Measuring GDP: Expenditure Approach, Income Approach

• GDP  = C + I + G + (X- N)

• NI = Employee Compensation (Wages) + Net Interest + Rental Income + Corporate Profits + Proprietor's Income

• Measuring GDP: Meaning, What's Excluded

• Reconciling NI, NDP, and GDP

• Personal Income versus Disposable Personal Income

• GDP Deflator: Definition, Uses, GDP per capita

• Nominal GDP versus real GDP

• Limitations of real GDP: Uses of GDP, Limitations and Exclusions

• Uses and Abuses of GDP

• International Comparisons

Chapter 8: Growth

• Benefits & Costs of growth

• Older, classical theories of growth

• Modern growth theories

• Sources of recent growth

• Institutions & policies that support growth

Chapter 9: AD, AS

• Aggregate Demand 

  • Why AD Slopes Downward: Wealth Effect and Foreign Sector Substitution Effect, Interest Rate Effect

  • Changes (Shifts) in AD: Anything that Changes C, I, G, or (X -N) (besides the current price-level and level of real GDP),

• Aggregate Supply:  is upward Sloping

  • Determinants of AS: Resource Costs and Availability, Government Intervention (Regulation, Taxes on Productivity, etc.)

• Keynesian Versus Classical Economics, Different Belief about the Economy

  • Classical: Say's Law, Flexible Wages, Prices, and Interest Rates, High Employment will Occur Automatically, increased investment makes up for increased saving

  • Keynesian: Inadequate AD may not Automatically Adjust,  High Employment is the Top Priority

• Equilibrium and adjustments towards equilibrium

• Full employment & potential output

• Long run vs.  short run equilibrium

Chapter 10: The Aggregate Production/Aggregate Expenditures Model (multiplier model)

• (Planned) Aggregate Expenditures C + I + G + (X - M)
• Consumption: Consumption, Savings, Dissaving, Income, Autonomous C, Induced C
• Consumption Function: Vertical Intercept = Ca, Slope = MPC, C = C_a + (mpc) Y_D
• Marginal Propensity to Consume (MPC) and the Marginal Propensity to Save (MPS)
• MPC + MPS = 1
• Graph: 45 Degree Line, Savings and Dissaving on the Graph with the C Function
• Equilibrium Consumption: Where C Intersects 45 Degree Line; solve mathematically
• Fiscal Policy (Demand Management)
  • Leaks & injections
  • Spending, tax, transfer, & balanced budget multipliers
  • Contractionary and Expansionary Policies
  • Problems with Activist Policy
  • Crowding Out
  • Automatic Stabilizers and Discretionary Fiscal Policy