Intro Economics Survey Course
Intro Economics Survey Course ECON 201
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This 3 page Class Notes was uploaded by Kelsi Adams I on Monday October 26, 2015. The Class Notes belongs to ECON 201 at University of Tennessee - Knoxville taught by George Spiva in Fall. Since its upload, it has received 9 views. For similar materials see /class/229887/econ-201-university-of-tennessee-knoxville in Economcs at University of Tennessee - Knoxville.
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Date Created: 10/26/15
Econ 201 Exam 3 Key Terms Note This is a list of terms that you should know for the test The de nitions come from Dr Spiva s lecture notes the labs and the textbook This is NOT a fully comprehensive list meaning stuff that s not on here is still fair game for questions but it does contain most of the key terms Ifyou don t recognize some of these from lab check the textbook and the lecture notes for their de nition I promise you each of them is in one or more of the three Absolute Advantage AD Curve Aggregate Demand Aggregate Supply Arbitrage AS Curve Automatic Stabilizers Balanced Budget Budget De cit Budget Surplus Bundle Of Goods Commodity Money Comparative Advantage Consumer Price Index Consumption Consumption Possibilities Frontier CPF Contractionary Recessionary Gap Contractionary Fiscal Policy Cost Push In ation Crowding out Currency Appreciation Currency Depreciation Cyclical Unemployment DecisionMaking Program Lag De ation Demand for Money Demanders in a Foreign Exchange Market DemandPull In ation Discount Rate DiscouragedWorker Effect Discretionary Fiscal Policy Effectiveness Impact Lag Exchange Rate Expansionary In ationary Gap Expansionary Fiscal Policy Expectational In ation Federal Open Market Committee Federal Reserve Fed Fiat Money Fiscal Policy Fixed Exchange Rate Flexible Exchange Rate Frictional Unemployment Full Employment GDP De ator Gold Standard Government Spending Hyperin ation Implementation Lag In ation In ation Rate Intemational Specialization Investment Labor Force Labor Force Participation Rate Longrun AS Curve Longrun Equilibrium M1 M2 Managed Float System Marginal Propensity to Consume MPC Marginal Propensity to Save MPS Misery Index Monetary Policy Money as a Medium of Exchange Money as a Store of Value Money as a Unit of Account Money Market Mutual FundMoney Supply Net Exports Nominal GDP Nominal Interest Rate Nominal Wage Nondiscretionary Fiscal Policy Open Market Operations Opportunity Cost Potential Output Price Index Production Possibilities Frontier PPF Purchasing Power Parity Theory Quantity Theory of Money Real GDP Real Interest Rate Real Wage Recognition Lag Representative Money Required Reserve Ratio Reserves and Reserve Requirements Savings Seasonal Unemployment Shortrun AS Curve Shortrun Equilibrium Simple Money Multiplier Simple Spending Multiplier Simple Tax Multiplier Social Capital Speculation Structural Unemployment Suppliers in a Foreign Exchange Market Supply Shocks Bene cial and Adverse Tariff Terms of Trade Trade Rate Time Deposits CDs Unemployment Unemployment Rate Velocity of Money World Price Exam 3 Key Exercises to Know THE LABS AND VIDEO SHOULD HELP WITH THESE Really though I literally just went through each lab just like you can do to answer them Changes in Price Level 0 How we measure In ation o How to calculate a price index using a bundle of goods and their prices 0 Calculating in ation using the Percentage Change Formula NewOldOld 0 Know the issues associated with using a price index DUnemployment 0 Know the relevant de nitions 0 Be able to identify if an economy is at full employment 0 Given the appropriate numbers be able to identify the following 0 Given the appropriate numbers be able to calculate I Unemployment Rate I Labor Force Participation Rate Real and Nominal GDP I Labor Force I Employed I Unemployed Structurally Unemployed Frictionally Unemployed Cyclically Unemployed Seasonally Unemployed o 0 Given prices and quantities for multiple years be able to do the following I Calculate each year s Nominal GDP I Calculate each year s Real GDP I Calculate the GDP De ator I Calculate the In ation Rate Given a Nominal GDP and a Real GDP be able to nd the GDP De ator D Aggregate Demand 0 Know the Components 0 Know what the AD Curve shows and why it s slopes downward 0 Be able to appropriately shift the AD curve for a given change in a component I Know what changes increase AD and what changes decrease AD D Be able to define and calculate the Marginal Propensity to Consume MPC and the Marginal Propensity to Save MPS 0 Know the minimum and maximum number they can each be and their sum D Simple Spending Multiplier 0 Definition 0 How to Calculate it 0 Find the total impact on the economy money created from an initial amount of new spending for a given MPC Ij Aggregate Supply 0 Determinants o What the AS Curve shows 0 Difference between ShortRun and LongRun AS and their curves I Why each is shaped the way it is D Contractionary and Expansionary Gaps 0 Definitions and Graphically be able to identify them 0 Problems with each D Fiscal Policy 0 Distinguish between nondiscretionary and discretionary fiscal policies I Define and give examples of each I Explain the concept of Automatic Stabilizers 0 Explain and provide examples of Expansionary and Contractionary Fiscal Policy as well as identify when each is appropriate ie for which gap in the economy 0 Problems with Fiscal Policy I Lags I Crowding Out D Which component of AD does it affect and why 0 Be able to Calculate the Simple Tax Multiplier and use it to find the effect on output from a given at increase or decrease in taxes DMoney 0 Explain the definition and importance of each characteristic of money I Medium of Exchange I Unit of Account I Store of Value 0 Define the following types of money and give an example of each I Fiat Money I Commodity Money I Representative Money 0 Components of M1 and M2 D Federal Reserve 0 What it is o What the banks do in the broad sense is ne nothing too speci c DMonetary Policy 0 Understand what monetary policy is I That it pertains to the AD Curve I Targets Investment I Changes the interest rate in order to increasedecrease Investment I The Federal Reserve increases or decreases the money supply in order to achieve the desired change in the equilibrium interest rate determined in the money market 0 Given a state in the economy contractionary or expansionary gap be able to identify the necessary changes to close it in AD Investment interest rates and the money supply 0 The three ways in which the Fed can manipulate increasedecrease the money supply and what action is appropriate for each respective change I Open Market Operations I Changing the Required Reserve Ratio RRR I Changing the Discount Rate 0 Simple Money Multiplier I Be able to Calculate the Simple Money Multiplier using a given RRR I Find the total amount of money created given an initial amount deposited and an RRR hint rst nd the multiplier I Interpret the implications on money creation from a higher or lower RRR D Quantity Theory of Money 0 Know the equation and what each variable letter stands for o What the Quantity Theory says about changing the money supply in the long run where velocity of money and output are xed DTrade 0 Be able to identify which party has the Absolute Advantage in producing each good 0 Be able to nd which party has the Comparative Advantage in producing each good by rst calculating the opportunity cost for each party of both goods in terms of the other good 0 Provide limits for the terms of trade between two parties given the opportunity cost of each identify a trade which would be mutually bene cial from a group of possibilities o The implications of trade on a countries consumption relative its Production Possibilities Frontier PPF D Intemational Finance 0 Understand a foreign exchange market I Who makes up the Supply I Who makes up the Demand I Why each is sloped the way that it is o Arbitrage I What it is and why it s done what are the necessary requirements for an arbitrageur to make a pro t I Given the exchange rate in two different markets be able to identify in which market would the arbitrageur buy or sell a particular currency Remember it s better to buy cheaper currency and sell where its price is higher 0 Speculation I Understand the concept and why it s done 0 De ne the Purchasing Power Parity Theory and explain what it means 0 Identify our current international monetary exchange system is it based on xed or exible exchange rates oDe ne Social Capital and explain the implications of good and poor Social
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