Test#3 Study Guide-3
Part 1: Will consist of 20 True/False Questions worth 3 points each. (60 points total)
The following are a list of topics to study for the test:
- Negative demand shocks (examples)
- Positive supply shocks (examples)
- Stagflation
- long-run macroeconomic equilibrium
- recessionary gap
- inflationary gap
- Fiscal policy
- Expansionary vs. Contractionary Fiscal Policy
- The government spending multiplier vs. the government transfers/taxes multiplier
- The savings-investment spending identity in a closed economy
- national savings (formula for GDP in a closed economy)
- The two main types of assets
- The M1 vs. M2
- The three main roles that money plays in the economy
- A bank's T-account
- The monetary base vs. the money supply
- The two main parts of the Federal Reserve System
- The Federal Open Market Committee
- The federal funds rate vs. the discount rate
- Open-market operations
Part 2: Graphical Illustration. (40 points total)
- The Short-Run Macroeconomic Equilibrium
- The Long-Run Macroeconomic Equilibrium
- A Recessionary Gap
- An Inflationary Gap