Gallaway
ECO 385

Study Guide Test #1

To prepare for this test, students should study their text, notes, and homework.  Students should also be prepared to answer questions from any additional readings.  To help you get started, here is a list of topics with which you should be familiar.

Chapter 1

  • Natural GDP

  • Natural Rate of Unemployment

  • Business Cycle

  • Inflation and redistribution

  • 3 Macro Goals and how they are affected by GDP Gap

Chapter 2

  • Circular Flow

  • Nominal vs Real

  • Intermediate goods

  • Problems calculating inflation and RGDP

    • geometric average

    • Chain-weighted

  • Calculating Unemployment

  • Discouraged Workers

  • Okun's Law

Chapter 3

  • Planned expenditure

  • Consumption function

  • Multiplier

  • Tax Multiplier

  • Equilibrium:  Induced saving = autonomous planned spending

  • Fiscal Policy

 

Chapter 4

  • Determinants of planned investment and autonomous consumption

  • Shifts in Ap

  • Deriving IS

  • Three Functions of Money

  • Liquidity Preference Theory

  • Deriving LM

  • IS/LM Equilibrium, what brings us back to each curve?

  • Crowding out

Chapter 5

  • Strong & weak monetary and fiscal policies

  • Interaction between monetary and fiscal policy

  • Japanese Policy Dilemma

  • Stuctural vs Cyclical deficit

  • Automatic Stabilizers