Economics 200
KEY CONCEPTS FOR THIRD EXAM
Inflation/Consumer Price Index
Define CPI
Problems with CPI
Base year
Who wins/who loses from unexpected inflation
Real Interest Rate
Employment/Unemployment
Unemployment rate
Labor force
Participation rate
Employment rate
Three types of unemployment
Macroeconomic Analysis
Aggregate Demand
Aggregate Supply
Determinants of aggregate demand
Determinants of aggregate Supply
Graphical analysis of changes in AD & AS
Stagflation
Demand pull vs cost push inflation
Money
Value of money
Functions of money
Inflation and money
Monetary Policy
Definition
Creation of money
Required reserves
Loans
Money multiplier
Maximum expansion of the money supply
Maximum expansion of loan
Trace creation of money through the banking system
Limits of expansionary monetary policy
Tools of monetary policy
Reserve requirement, discount rate, open market operations
Monetary policy to fight inflation
Monetary policy to fight unemployment
Fiscal Policy
Definition
Who conducts fiscal policy?
Tools of fiscal policy
Taxes and government spending
Fiscal policy to fight inflation
Fiscal policy to fight unemployment
Built-in stabilizers
Debt vs deficit
Problems associated with large federal government deficits
Lags in fiscal policy
International Currency Exchange Markets
Why trade currency?
Who is the demander in the currency market?
Who is the supplier in the currency market?
Appreciation of a currency
Depreciation of a currency
Events that shift currency demand curve
Events that shift currency supply curve
Benefits and costs of a strong dollar
Benefits and costs of a weak dollar