(Revised April 25, 2008)
You are going to take a multiple choice exam in macreconomics. The following material should help you prepare for the exam.
Click on a topic to download a .pdf file of notes on that topic.
- Define and calculate GDP. Understand the difference between real and nominal variables (e.g. GDP, wages, interest rates) and know how to construct a price index.
- Explain the role of capital investment, education and technology in determining economic growth.
- Explain the importance of institutions, including private property rights, in long-run economic growth.
- Explain that interest rates are determined in a market for loanable funds.
- Explain what factors determine the level of unemployment.
- Explain how the Federal Reserve and the banking system create money (i.e., the supply of money). Explain the factors that affect the demand for money.
- Know the equation of exchange and the connection between money and inflation.
- Explain how slow price adjustments might affect the short-run response of the economy to economic shocks.
- Explain the strategy behind government policies to stabilize the economy and the specific role of the Federal Reserve.
- Explain why a merchandise trade deficit is offset by capital flows and investment in debtor countries.
- There is also video material available in Macroeconomics.