Macroeconomics Exam Review

Introduction

• Jacob Clifford hosts a review session for macroeconomics.
• Focuses on reviewing key concepts for the upcoming exam.
• Structure: Start with big concepts, move to specifics.

Four Key Areas for the Exam

1. Definitions

   • Critical to know the definitions of key terms.
   • Examples: Investment, GDP, unemployment types, sticky wages, stagflation, fiscal and monetary policy.

2. Graphs

   • Six key graphs: Production Possibilities Curve, Aggregate Demand/Supply, Phillips Curve, Money Market, Loanable Funds, Foreign Exchange.
   • Reserve Market is a potential addition but not likely a major focus.

3. Relationships

   • Understanding cause and effect is crucial.
   • Examples: How interest rates affect investment, fiscal policy's impact on GDP.
   • Practice questions demonstrate these relationships.

4. Equations

   • Important equations: Spending multiplier, Money multiplier, Real interest rate, Unemployment rate, CPI, GDP deflator.
   • Ability to apply these equations in practice questions.

Unit Highlights

Unit 1: Basic Economic Concepts

• Production Possibilities Curve.
• Comparative Advantage and Terms of Trade.
• Supply and Demand.

Unit 2: Measuring Economic Performance

• GDP: What's included, limitations.
• Unemployment types and natural rate.
• Inflation and CPI calculations.

Unit 3: Aggregate Demand and Supply

• Aggregate Demand/Supply Graphs.
• Fiscal Policy: Government spending and tax changes.
• Spending multipliers and long-run self-adjustment.

Unit 4: Financial Sector

• Definition and functions of money.
• Monetary Policy and Money Market Graph.
• Bank Balance Sheets and Loanable Funds.
• Federal funds rate vs. Discount rate.

Unit 5: Long-Run Consequences of Stabilization Policies

• Phillips Curve: Relationship between inflation and unemployment.
• Long-run neutrality of money.
• Economic growth and shifts in long-run aggregate supply.

Unit 6: Open Economy

• Balance of Payments: Current account vs. Capital and Financial account.
• Foreign Exchange Market: Currency demand and supply.

Exam Strategies

• Draw key graphs ahead of time.
• Focus on understanding key relationships and concepts.
• Practice equations and definitions for clarity.

Conclusion

• Encourage students to practice and review efficiently.
• Reminder of the effort put into preparing and the importance of the concepts learned.
• Motivational send-off wishing students success on their exam.