Macroeconomics Study Guide and Review
Directions: Review the topics listed below then complete the questions on the following two pages.
What is Macroeconomics?
 Differences in Supply/Demand Diagrams
 And Effects of Shifts
Stabilization Policy
 Demand Side vs. Supply Side
Facts about & examples of Inflation
Facts about & examples of GDP
Facts about Unemployment
 Different types of unemployment
Taxation
 Different Types of Taxes and Examples
 Tax Terms
 MPC and Multiplier
Tax Policy
 Mandatory vs. Discretionary Spending – Federal Budgets
 Operating vs. Capital Budget – State Budgets
 Federal vs. State Budgets in terms of Revenue / Expenditures
Managing Demand or Fiscal Policy
 Determinants of C,I,G,X,IM
 How to influence C, I, G, X, IM
Expansive Fiscal Policy vs. Restrictive Fiscal Policy
Conservative (Republican) vs. Liberal (Democratic) solutions to problems
Classical vs. Keynesian vs. Supply Side Solutions
How to read the leading indicators
Recent Economic History – historical data of the last 20 years and current numbers.
Current Events – Social Security, National Debt, Other Current Events???
Fear the Boom and the Bust Lyrics
 Keynesian vs. Hayekian philosophy
Terms
1. Real GDP falls for up to 6 consecutive months
2. Terrible, runaway inflation, but not the worst possible
3. GDP at Full Employment
4. The type of inflation we want
5. Term for economy with rising inflation and falling unemployment.
6. Unemployed by job elimination
7. Unemployed by a recession
8. Equilibrium GDP above Potential GDP
9. Unemployed by own choice
10. Equilibrium GDP below potential GDP
Statistics
1. Considered a good, normal inflation rate
2. Considered good, normal GDP growth rate
3. Current inflation rate –
4. Current unemployment rate –
5. Current GDP growth rate –
6. Amount of unemployment needed for a healthy economy –
7. Full Employment –
8. Current GDP is closest to how many billion –
9. The state that would be the world’s 6th largest economy. –
10. Within 10 billion dollars, our current balance of trade –
Econ Potpourri
1. Biggest portion of GDP –
2. Rising inflation hurts this group of people the most –
3. Supply-side solution to fixing inflation –
4. Supply-side solution to fixing recession –
5. According to government statistics – name two of the three categories of people in our economy –
6. During a recession, what type of government policy do we want to use –
7. Money taken in taxes and given out to the poor –
8. During times of inflation, what type of government policy do we want to use –
9. Term for the amount of money Americans will spend from what they receive –
10. Author of supply side theory –
Government Policy
1. Fiscal Policy to cure inflation –
2. Fiscal Policy to cure a recession –
3. A type of tax that rises with income –
4. A type of tax that is a constant fraction of income 5. A type of tax paid on a specific activity –
6. The government spends the greatest amount of money on this –
7. Author of demand side stabilization policy 8. Two republican solutions to fixing economy –
9. Two democratic solutions to fixing economy –
10. Formula of the Multiplier –
The US Economy
1. Biggest determinant of consumer spending –
2. Another determinant of consumer spending –
3. Biggest determinant of investment spending –
4. Biggest determinant of government spending –
5. Within 2000, the amount every American contributes to GDP –
6. Sector of jobs that are the largest number & fastest growing in the American economy –
7. Clinton’s largest economic achievement –
8. Within 2%, percentage of all American workers that are farmers –
9. Within 2%, Percentage of all American workers that are men. –
10. Within 2%, Percent of income in taxes the average American pays –
Econ Goals
1. Optimal use of scarce resources –
2. Increasing our productive capacity –
3. Protecting individuals against risks –
4. Democratic goal number one –
5. Republican goal number one –
6. One goal with no political affiliation –
7. Two goals that go with NAFTA –
8. Two goals that go with an increased gas tax –
9. Three republican goals –
10. Three democratic goals –