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ECN 3100

ECN 3100. Macroeconomics (Revision). Chapter 23 Measuring a nation’s income. You should know … the distinction between microeconomics vs macroeconomics why an economy’s total income equals its total expenditure how gross domestic product (GDP) is defined and calculated

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ECN 3100

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  1. ECN 3100 Macroeconomics (Revision) Revision

  2. Chapter 23 Measuring a nation’s income • You should know … • the distinction between microeconomics vs macroeconomics • why an economy’s total income equals its total expenditure • how gross domestic product (GDP) is defined and calculated • the break down of GDP into its 4 major components • the distinction between real GDP and nominal GDP • whether GDP is a good measure of economic well-being • circular flow diagram • formulas: GDP, GDP Deflator Revision

  3. Chapter 24 Measuring the cost of living • You should know … • how the consumer price index is constructed • why the CPI is an imperfect measure of the cost of living • how to compare CPI and the GDP deflator as measures of overall price level • how to use a price index to compare dollar figures from different times • the distinction between real and nominal interest rates • formulas: CPI, inflation rate, indexation, real interest rate Revision

  4. Chapter 28 Unemployment • You should know … • the data used to measure the amount of unemployment • what is the natural rate of unemployment • how unemployment can result from minimum wage laws • how unemployment can arise from bargaining between firms and unions • how unemployment results when firms choose to pay efficiency wages • problem in measuring unepmloyment • formulas: unemployment rate, labor force participation rate Revision

  5. Chapter 29 The monetary system • You should know … • what money is and what functions money has in the economy • what the Federal Reserve System is. • how the banking system helps determine the supply of money • what tools the Federal Reserve uses to alter the supply of money • formulas: M1, M2, T-account, money multiplier Revision

  6. Chapter 30 Money growth & inflation • You should know … • why inflation results from rapid growth in the money supply • the meaning of classical dichotomy and monetary neutrality • why some countries print so much money that they experience hyperinflation • how the nominal interest rate responds to the inflation rate • the various costs that inflation imposes on society • formulas: inflation rate, value of money, velocity of money Revision

  7. Chapter 3 Interdependence & gains from trade • You should know … • how everyone can benefit when people trade with one another • the meaning of absolute and comparative advantage • how comparative advantage explains the gains from trade • how to apply the theory of comparative advantage to everyday life and national policy • formulas: opportunity costs for comparative advantage Revision

  8. Chapter 31 Open-economy macroeconomics • You should know … • how net exports measure the international flow of goods and services • how net capital outflow measures the international flow of capital • why net exports must always equal net foreign investment • how saving, domestic investment, and net capital outflow are related • the meaning of nominal exchange rate and the real exchange rate • purchasing power parity as the theory of how exchange rates are determined • formulas: net exports, trade deficit/surplus, net capital outflow, NCO=NX identity, savings Revision

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