ECN211 Exam 2 Study Guide PDF

ECN211 Exam 2 study guide While there is no way I can include all of the topics below into a single exam, knowing how to do all of the listed things will significantly increase your chances of performing well on the test. In order to succeed, you should be able to: **Unemployment:** 1. Know th...

ECN211 Exam 2 study guide While there is no way I can include all of the topics below into a single exam, knowing how to do all of the listed things will significantly increase your chances of performing well on the test. In order to succeed, you should be able to: **Unemployment:** 1. Know the definition of the unemployment rate, be able to calculate the unemployment rate, LFPR, adult population, labor force, etc. based on the available data. 2. Know how the BLS calculates unemployment rate, be able to identify the issues with the UR calculation and their effects on the accuracy of the estimates. 3. Understand the limitations of the UR rate in describing the economic situation. 4. Know the different types of unemployment and be able to identify the particular type of unemployment based on a situation. 5. Know what causes different types of unemployment and what a government can do to affect each unemployment type. **Measuring the price level -- CPI:** 1. Know the definition, formula, and be able to calculate the CPI (similar to the homework problems). 2. Know how the CPI is calculated by the BLS (steps in the process). 3. Be able to calculate the inflation level using the CPI data. 4. Know and understand what it means if the CPI is below 100, equal to 100, above 100. 5. Know the problems with the CPI calculation discussed in class and be able to identify and explain them. Also, what are the effects of those issues? 6. Know and understand the differences between CPI and GDP deflator, which events affect each ot the inflation measures, etc. **Economic Growth and Productivity:** 1. Know the basic facts about living standards and growth rates around the world. 2. Know the relationship between productivity, GDP, and standard of living. 3. Know the factors that affect productivity of labor, be able to explain them and discuss government policies that can improve productivity. **Short-run analysis.** 1\. Know and understand the three key facts about economic fluctuations.\ 2. Understand why the AD-AS model is not just a blown-up version of a regular supply-and-demand model.\ 3. Be able to construct an AD-AS diagram, understanding: 4. Be able to use the AD-AS model to analyze the effects of economic shocks using the four steps on the last slide, similarly to what we did in class. Be able to describe the effects of the shock on the price levels, output, unemployment, etc. 5. Understand (within the limits of in-class discussion) the limitations of choices available to the government and be able to propose a government policy (policies) that can remedy the situation. 6. Understand the concept of the Short-Run Philips Curve and its implications for the government policy. **Neoclassical and Keynesian Economics** 1. know the differences in the two theories' views on the relationship between prices and output in the short run and the long run. 2. Understand the implications of the two theories' views for the government policy. **Government policy (fiscal)** 1. Know and understand the differences between expansionary and contractionary policies, how each of them can be conducted (through government spending, taxes) and be able to analyze the policy effects on the AD. 2. Be able to analyze the effects of these policies on inflation, output, and unemployment 3. Be able to discuss "crowding out" and its consequences. **Money and Monetary system:** 1. Know and understand the definition and main functions of money. 2. Understand how fractional reserve banking system creates money, be able to calculate the money multiplier, as well as the response in money supply to changes in Fed's regulations. For the Final 3. Understand the role of the Fed, its monetary policy tools, and how Fed's actions affect the supply of money in the economy. 4. Understand and be able to predict the effects of Fed's actions on the price level (inflation). **Economic policy (fiscal for second exam, both fiscal and monetary for the final.)** 1. Know and understand the differences between expansionary and contractionary policies, how each of them can be conducted (through government spending, taxes, changes in money supply, etc.) and be able to analyze the policy effects on the AD. 2. Be able to analyze the effects of these policies on inflation, output, and unemployment 3. Be able to discuss "crowding out" and its consequences.