William Rainey Harper College MACROECONOMICS! MACROECONOMICS IN THE GLOBAL ECONOMY Fall 2012 ~/~ Home ~/~ Syllabus ~/~ Schedule ~/~ Assignments ~/~ Lecture Outlines ~/~ Online Lectures ~/~ Blackboard ~/~ Textbook Website ~/~

Exam 2 Study Guide

Define:

• recession
• AD and AS
• cost-push inflation
• ratchet effect
• demand-pull inflation
• fiscal policy
• rule of 70
• structural unemployment
• frictional unemployment
• cyclical unemployment
• natural rate of unemployment (full employment rate of unemployment)
• discouraged workers
• nominal income
• real income
• final goods and services
• net investment
• gross investment
• nominal GDP
• real GDP
• infrastructure
• productivity
• DVC (LDC)
• IAC (MDC)

why is AD downsloping?

explain the shape of the AS curve

determinants of AD andAS - how they work -- change in AD -- change in AS !!!!!

fiscal policy and monetary policy

• expansionary and contractionary
• tools

calculate the unemployment rate

calculate the inflation rate

effects of inflation (who suffers? who benefits?)

calculate nominal GDP and real GDP

• GDP = C + I + G + Xn
• real GDP = (nominal GDP / price index) x 100

investment: components, net private domestic investment, gross private domestic investment, positive net investment, negative net investment

GDP and social welfare (Nation's well-being)

Economic Growth

• 3 models to show an increase in the potential output (economic growth on the production possibilities graph, AD/AS graph, and the long run AS graph)
• change in the potential output vs. achieving the potential
• see yellow page quick quiz
• productivity -- how to increase labor productivity

LDCs (DVCs) and MDCs (IACs)

• % income earned by the world's richest 20%
• economic growth rates and diverging income levels
• characteristics of LDCs (DVCs)
• effects of agricultural subsidies in the MDCs (IACs) on farmers in the LDCs (DVCs)
• what can MDCs do to help LDCs? - Trade vs. Aid