Complete the Mandatory Orientation (& sign up on Remind) by January 17thst
Below you will find the learning objective, concept, idea, term, or theory that each question on the exam will cover. Each number in the following list refers to the question number on Exam 4 that will test your knowledge of that specific learning objective. Each of these topics/learning objectives is discussed in the textbook in the order that they are listed below. A much better understanding can often be attained by working through MyEconLab assignments connected to any of these objectives.
After reading Chapter 16, you should be able to:
Explain the three categories of money demand, how money demand responds to changes in interest rates and GDP, and how these changes are depicted on the money demand graph.
Explain how the monetary policy pursued by the Fed influences interest rates and hence bond prices.
Explain the direct and indirect effects of monetary policy on short run AD. Include both expansionary and contractionary changes and the use of various policy tools.
Explain how will monetary policy affect net exports and the foreign exchange rate.
Define the equation of exchange. Be able to define all four variables.
List the assumptions made to turn the equation of exchange into the quantity theory of money. What does this theory predict?
Explain both expansionary and contractionary monetary policy using the three graph transmission mechanism.
Explain:
a. which three interest rates are particularly relevant to carrying out monetary policy;
b. the role of the FOMC and the Trading Desk in carrying out monetary policy; and
c. the role of the Taylor Rule in carrying out monetary policy.
Explain what "credit policy" is at today's Fed, how it operates, and arguments for and against it.
Explain the Keynesian approach to an increase and decrease in the money supply and its effects on the interest rate and the GDP.
After reading Chapter 18, you should be able to:
Define active and passive policymaking. Why would policy makers prefer one or the other?
Define the natural rate of unemployment, cyclical, structural, frictional.
Show how expansionary and contractionary policy changes (either fiscal or monetary) affect the AD-AS graph, including both short run and long run changes and also be able to explain the policy implications of the short run Phillips curve.
Explain the importance of expectations as they relate to the Phillips curve and what changes Phelps and Friedman proposed to Phillips work.
Define rational expectations and explain the short run and long run policy implications of anticipated vs. unanticipated policy changes.
Discuss rational expectations argument about policy irrelevance and explain how this theory views the relationship between expectations and SRAS.
Explain the real business cycle theory and supply shocks. Be able to illustrate both harmful and beneficial supply shocks on the AD-AS graph.
Discuss the Keynesian justifications for active policymaking: menu costs, sticky prices and wages and bounded rationality.
Explain what is meant by the New Keynesian Phillips Curve and distinguish which beliefs about how the economy functions would lead an economist to advocate active or passive policymaking.
Explain the three elements of people's decision making process on which behavioral economists focus and what the consequences of this bounded rationality are for macroeconomic policymaking.
Explain why population growth can have uncertain effects on economic growth.
Explain why the existence of dead capital retards economic growth.
Describe the growth shift from advanced nations to developing and emerging countries.
Discuss the sources of international investment funds for developing nations.
Identify the key functions of the World Bank and the International Monetary Fund.
After reading Chapter 31, you should be able to:
Explain why nations can gain from specializing in production and engaging in international trade.
State the common arguments against free trade.
Describe ways in which nations restrict foreign trade.
Identify key international agreements and organizations that adjudicate trade disputes among nations.