| *Home* *ECON2301* Review Test 2 |
| Review for Test 2 Chapter 10 In a private, closed economy: What determines the level of Aggregate Expenditures (AD)? (C+Ig=GDP) How is the equilibrium GDP determined? (pg 174, table 10-2) What are the determinants/aspects that cause it to be equilibrium? (inventory, savings, planned investment) What happens when you have too much inventory or not enough inventory? What are some of the things that will shift your investment schedule? What are the injections and leakages? Identify which are which. (pg 185) The relationship between value of a dollar and GDP and net exports In an open economy: What is your GDP formula? When you have changes in govt spending and taxes, how does it effect GDP? Chapter 11 What determines the shape or slope of AD? What are the determinants that will shift AD? What will shift it to left/right? What will increase/decrease it? (ex: change in investment, personal taxes) Be able to calculate (ex: MPS= .8, shift GDP by $20, how much does GDP shift?) What is the shape of long/short run AS curves? (long=vertical, short=horizontal, then up sloping) What are things that will shift AS curve? (wage, productivity, pg 203-205) How taxes will influence AD and AS. How does change in U.S. dollar influence the AS? How the equilibrium is determined as it relates to AD and AS (where they intersect). What does cost push inflation and demand pull inflation look like graphically? (cost-push: <--AS, demand-pull: AD-->) *Graphically, what happened in late 1990�s? both shifted right; growth in GDP, low inflation, increase in AD but not high interest. Graphs: 11-8 (AD), 11-9 (AS), 11-10 Chapter 12 What is the Employment Act of 1946? what did it establish/determine What�s a discretionary, expansionary, contractionary policy as it relates to a fiscal policy? What does govt do during exp. and cont. policy? Be able to identify which works fastest. Know how they are depicted graphically (see figs 12-1, 12-2) What is a built-in stability? (pg 218-220) What is a political business cycle? Chapter 13 What are functions of money? What is M1, M2, and M3? What is a transactions demand and an asset demand? and What do they look like graphically? How the equilibrium rate of interest is determined (pg 239, fig 13-1) Relationship between bond prices and interest rates. Fed�what are its responsibilities? what does it govern? what are its basic economic policy? What is the crowding out effect? What does it mean when we say Fed is quasi-public? |