Introduction to Economics Final Homework
I have a final homework due at 10am tomorrow morning. I will be recieving the homework at 8am Pacific Los Angeles time. It covers 6 chapters of econ information. I have posted an outline of what might be covered in the homework below.
1. Define GDP and explain why the value of production, income, and expenditure are the same for an economy. A.GDP Defined 1. Value Produced 2. What Produced 3. Where Produced 4. When Produced B.Circular Flows in the U.S. Economy 1. Consumption Expenditure 2. Investment 3. Government Expenditure on Goods and Services 4. Net Exports of Goods and Services 5. Total Expenditure 6. Income C.Expenditure Equals Income 2. Describe how economic statisticians measure GDP and distinguish between nominal GDP and real GDP. A.The Expenditure Approach 1. Expenditures Not in GDP B.The Income Approach 1. Wage Income 2. Interest, Rent, and Profit Income 3. From Factor Cost to Market Price 4. From Net to Gross 5. Statistical Discrepancy C.GDP and Related Measures of Production and Income 1. Gross National Product 2. Disposable Personal Income D.Real GDP and Nominal GDP E.Calculating Real GDP F. Using the Real GDP Numbers 3. Describe the uses of real GDP and explain its limitations as a measure of the standard of living. A.The Standard of Living Over Time B. Tracking the Course of the Business Cycle C. The Standard of Living Among Countries D.Goods and Services Omitted from GDP 1. Household Production 2. Underground Production 3. Leisure Time 4. Environment Quality E.Other Influences on the Standard of Living 1. Health and Life Expectancy 2. Political Freedom and Social Justice
1. Define the unemployment rate and other labor market indicators. A.Current Population Survey B.Population Survey Criteria C.Two Main Labor Market Indicators 1. The Unemployment Rate 2. The Labor Force Participation Rate D.Alternative Measures of Unemployment 1. Marginally Attached Workers 2. Part-Time Workers 2. Describe the trends and fluctuations in the indicators of labor market performance in the United States. A.Unemployment Rate B.The Participation Rate 3. Describe the sources and types of unemployment, define full employment, and explain the link between unemployment and real GDP. A.Frictional Unemployment B.Structural Unemployment C.Cyclical Unemployment D.“Natural” Unemployment 3. The Real Wage Rate 4. Unemployment Benefits
1. Explain what the Consumer Price Index (CPI) is and how it is calculated. A.Reading the CPI Numbers B.Constructing the CPI C.The CPI Market Basket D.The Monthly Price Survey E.Calculating the CPI F. Measuring Inflation and Deflation 2. Explain the limitations of the CPI and describe other measures of the price level. A.Sources of Bias in the CPI 1. New Goods Bias 2. Quality Change Bias 3. Commodity Substitution Bias 4. Outlet Substitution Bias B.The Magnitude of the Bias C.Two Consequences of the CPI Bias 2. Increases in Government Outlays and Decreases in Taxes D.Alternative Measures of the Price Level and Inflation Rate 1. GDP Price Index 3. Adjust money values for inflation and calculate real wage rates and real interest rates. A.Dollars and Cents at Different Dates B.Nominal and Real Values in Macroeconomics C.Nominal GDP and Real GDP D.Nominal Wage Rate and Real Wage Rate E.Nominal Interest Rate and Real Interest Rate
1. Explain what determines potential GDP. A.The Three Main Schools of Thought 1. Classical Macroeconomics 2. Keynesian Macroeconomics D.Potential GDP E.The Production Function F. The Labor Market 1. The Demand for Labor 2. The Supply of Labor 3. Labor Market Equilibrium 4. Full Employment and Potential GDP 2. Define and calculate the economic growth rate, and explain the implications of sustained growth. A.Calculating Growth Rates B.The Magic of Sustained Growth 3. Identify the main sources of economic growth and explain the growth process. A.Labor Productivity B. Saving and Investment in Physical Capital 1. Capital Accumulation and Diminishing Marginal Returns 2. Illustrating the Law of Diminishing Marginal Returns C.Expansion of Human Capital and Discovery of New Technologies D.Combined Influences Bring Labor Productivity Growth 4. Describe the policies that might speed economic growth. A.Preconditions for Economic Growth 1. Economic Freedom 2. Property Rights 3. Markets B.Policies to Achieve Faster Growth 1. Create Incentive Mechanisms 2. Encourage Saving 3. Encourage Research and Development 4. Encourage International Trade 5. Improve the Quality of Education
1. Define money and describe its functions. A.Definition of Money 1. A Commodity or Token 2. Generally Accepted 3. Means of Payment B.The Functions of Money 1. Medium of Exchange 2. Unit of Account 3. Store of Value C.Money Today 1. Currency 2. Deposits 3. Currency Inside the Banks Is Not Money D.Official Measures of Money: M1 and M2 1. Are M1 and M2 Means of Payment? 2. Describe the functions of banks. A.Commercial Banks 1. Bank Deposits 2. Profit and Risk: A Balancing Act 3. Reserves 4. Liquid Assets 5. Securities and Loans 6. Bank Assets and Liabilities: The Relative Magnitudes 3. Describe the functions of the Federal Reserve System (the Fed). A.The Structure of the Federal Reserve 1. The Chairman of the Board of Governors 2. The Board of Governors 3. The Regional Federal Reserve Banks 4. The Federal Open Market Committee B.The Fed’s Policy Tools 1. Required Reserve Ratios 2. Discount Rate 3. Open Market Operations C.How the Fed’s Policy Tools Work 4. Explain how the banking system creates money and how the Fed controls the quantity of money. A.Creating Deposits by Making Loans 1. The Monetary Base 2. Desired Reserves 3. Desired Currency Holding B.How Open Market Operations Change the Monetary Base 1. The Fed Buys Securities 2. The Fed Sells Securities C.The Multiplier Effect of an Open Market Operation D.The Money Multiplier
Define and explain the influences on aggregate supply. A.Aggregate Supply Basics 1. Why the AS Curve Slopes Upward a. Change in Output Rate B.Changes in Aggregate Supply 1. Change in Potential GDP 2. Change in Money Wage Rate 3. Change in Money Prices of Other Resources 2. Define and explain the influences on aggregate demand. A.Aggregate Demand Basics 1. The Buying Power of Money 2. The Real Interest Rate 3. The Real Prices of Exports and Imports B.Changes in Aggregate Demand 1. Expectations 2. Fiscal Policy and Monetary Policy C.The Aggregate Demand Multiplier 3. Explain how trends and fluctuations in aggregate demand and aggregate supply bring economic growth, inflation, and the business cycle. A.Macroeconomic Equilibrium 1. Adjustment toward Full Employment D.The Business Cycle E. Inflation Cycles 1. Demand-Pull Inflation 2. Cost-Push Inflation F. Deflation and the Great Depression
5. Types of Fiscal Policy a. Discretionary Fiscal Policy b. Automatic Fiscal Policy B.Discretionary Fiscal Policy: Demand-Side Effects 1. The Government Expenditure Multiplier 2. The Tax Multiplier 3. The Transfer Payments Multiplier 5. A Successful Fiscal Stimulus D.Limitations of Discretionary Fiscal Policy 1. Law-Making Time Lag 2. Shrinking Area of Discretion 3. Estimating Potential GDP 4. Economic Forecasting E.Automatic Fiscal Policy 2. Describe the Federal Reserve’s monetary policy process and explain the effects of monetary policy. A.The Monetary Policy Process 1. Monitoring Economic Conditions 2. Decisions of the Federal Open Market Committee (FOMC) B.The Federal Funds Rate Target C.The Ripple Effects of the Fed’s Actions 5.
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