Macroeconomics Review Sheet
I.
Introduction to Macroeconomics
-Definition of macroeconomics, the 3 macroeconomic goals set up by the Employment Act of 1946 (full
employment, price stability, and economic growth)
II.
Economic Growth
-Definition, Gross National Product (GNP), Business Cycle, make-up of the GNP, limitations of the GNP,
worksheet on the aspects counted in the GNP, problems with economic growth (third party costs), compare
it with G.D.P.
III.
Unemployment
-Four types of unemployment, unemployment rate and the characteristics included or excluded, side-effects
of unemployment , article (recession), solutions to unemployment, unemployment worksheet.
IV.
Inflation / Deflation
-Price stability, consumer price index (CPI), key factors of the CPI , figuring rate of inflation, limitations of
the CPI, worksheet on using the CPI to measure inflation
-Causes of inflation (demand-pull and cost-push), how is inflation cyclical, benefactors and losers of
inflation worksheet.
V.
Taxes
-Principles of taxation (benefit principle, ability to pay), progressive, regressive, and proportional, basic
types of taxes (income tax, sales tax, excise tax, property tax, social security tax (FICA), Estates and Gift
tax.
VI.
Fiscal Policy
-Definition, expansionary, contractionary, demand-pull inflation, demand deficiency (cyclical)
unemployment, business cycle, fiscal policy worksheet, stagflation, budget deficit v national debt.
VII.
Monetary Policy
-Federal Reserve system, the purpose of the Fed., parts of the Fed, ways to carry out monetary policy,
expansion and contractionary policies, monetary policy worksheet(s)
VIII.
Controlling the Economy
-Monetary / Fiscal Policy Game, Time lag, Business Cycle, lack of GNP control
Economics Standard 12.3
Students analyze the influence of the federal government on the American economy.
Economic Standard 12.5
Students analyze the aggregate economic behavior of the U.S. economy.
SMHS ESLR: Critical Thinking, Post Secondary Preparation (Samples of: Critical World Issues, Technological
Proficiency, and Critical Thinking), and Technological Proficiency
Overview of Macroeconomics
The 1930s were marked by periods of chronically high unemployment in
the United States. After World War II, Congress passed the Employment
Act of 1946, which stated that it was the continuing policy and responsibility
of the federal government to use all practical means to promote maximum
employment, production, and purchasing power. The Employment Act of
1946 established three important goals for the economy:
- Full Employment (also called high employment) exists when most
individuals who are willing to work at prevailing wages in the economy
are employed. Even under conditions of full employment, there will be
some temporary unemployment as workers change jobs and as new
workers seek their first job.
- Price Stability exists when the average level of prices in the economy is
neither increasing nor decreasing. The goal of price stability does not
imply that prices of individual items should not change but only that the
average level of prices should not. Therefore, a condition of price
stability usually means that some prices are rising, others are stable, and
still others are falling. A sustained rise in the average level of prices is
called inflation; a sustained decline is called deflation.
- Economic Growth exists when the economy produces increasing
amounts of goods and services over the long term. If the increase is
greater than any increase in population, the amount of goods and services
available per person will rise, and thus the nation’s level of living will
improve.