Introduction to Macroeconomics

I.       Supply and demand (read Chapter 3)

II.    Taking the Nation’s Economic Pulse (Ch. 7)

A.   GDP – Measure of Output

1.     What counts as GDP

2.     Dollars are the common denominator

B.   Two Ways of measuring GDP

1.     Expenditure Approach

2.     Income Approach

3.     Relative sizes of the components of GDP

C.   Adjusting for price changes—Real GDP

1.     CPI

2.     GDP Deflator

D.   Using the deflator to derive Real GDP from Nominal

E.   Problems with GDP as a measure of well-being

1.     Nonmarket Production

2.     Underground Economy

3.     Leisure and human costs

4.     Quality variation and innovation

F.    Using GDP to measure economic growth and to compare countries

III.  Business Cycles, Unemployment and Inflation (Ch. 8)

A.   Definition of business cycle

B.   Labor market

1.     Unemployed, employed, labor force

2.     Unemployment rate, labor force participation rates

3.     Reasons for unemployment

C.   Three types of Unemployment

D.   Full employment and the Natural Rate of Unemployment

E.   Actual vs. Potential GDP

F.    Effects of Inflation

1.     Anticipated

2.     Unanticipated


Exam 1

IV.Introduction to basic macro markets (Ch. 9)

A.   Circular flow of economic activity

B.   Goods and Services Market

1.     AD

2.     AS

a)    Short-run

b)    Long-run

3.     Equilibrium and adjustment to price changes

C.   Resource Market

D.   Loanable Funds Market

1.     Real and nominal interest rates

2.     Bond prices and interest rates

3.     Unanticipated inflation affects borrowers and lenders

4.     Net capital inflows and outflows affect LF

E.   Foreign Exchange Market

1.     Appreciation and depreciation of currency

2.     Net exports vs capital flows

F.    Leakage from the circular flow

V.   Working with the AS/AD model (Ch 10)

A.   Changes in AD

B.   Changes in AS

1.     Long-run

2.     Short-run

C.   Anticipated changes in market conditions

D.   Unanticipated changes and market adjustments

E.   Price levels, inflation, and the AS/AD model

F.    Is the economy self-correcting?  If so, how fast does it adjust?



Exam 2

VI.Fiscal Policy (Ch. 12)

A.   Budget deficits and surpluses

B.   Keynesian fiscal policy

C.   Crowding out

D.   New Classical view of fiscal policy

E.   Timing of fiscal policy

F.    Supply side effects

G.  U.S. fiscal policy


VII.          Money and Banking System (Ch. 13)

A.   What is money?

B.   Measuring the money supply

C.   Banking

D.   Money creation

E.   Federal reserve system

1.     Structure

2.     Indedpendence

3.     Tools to control money supply

F.    Future of money

VIII.       Monetary Policy (Ch. 14)

A.   Impact of monetary policy

1.     Demand and supply

2.     Equilibrium

3.     Transmission of monetary policy

4.     Unanticipated expansion and contraction

B.   Money in the long-run

C.   Monetary policy and interest rates

IX.              Economic Growth (Ch. 16)

A.   Importance of growth

B.   International comparisons

C.   Sources of growth

D.   Institutions and growth

E.   What role does government play?

F.    Economic freedom and growth

X.  Gains from International Trade (Ch. 17)

XI.            International Finance and Foreign Exchange (Ch. 19)