I am going to try this tonight and may make a change or two later on, so check back.
Here’s what I am thinking about for the final. It will cover chapters 8,9,10,11 (Assignment 3) and 12, 13, 14, 15 (Assignment 4). I’m not sure we will get through chapter 15, and we won’t know till at least Wednesday, so there is a bit of uncertainty there.
Remember that the questions will be drawn from the homework questions or ones very like them. There may be a few multiple choice questions. Also I expect to give you a take home portion on Wednesday December 13. The in-class portion will be on Friday December 15, with an option to take it Monday December 18 in TEC 146 at 4PM.
Chapter 8: Supply and demand for labor; trends in labor and unemployment in the modern era. Explain the effects of globalization and technological change on the labor market by using supply and demand. Types of unemployment; their costs; effects of a minimum wage using supply and demand theory.
Chapter 9: savings and wealth – definitions, balance sheet and income statement, capital gains and losses, reasons for saving, savings rate and the real interest rate, demonstration effect. Measuring national savings, public and private saving equations, total national savings, relation to government saving. Why is low household saving a problem? or is it? Factors affecting saving, and in what direction? Supply and demand in the saving and investment market (capital market)– effects of technology or budget deficit.
Chapter 10: what is money? what are its uses? How do we measure it? M1 and M2. How is money created by the banking system? Reserve requirements and how they work to create money. Federal reserve system and controlling the money supply. Open market operations. Preventing panics. Money and prices– velocity of money– money and long run inflation– MV = PY and its meaning, and why M and P tend to move together.
Chapter 11: The banking system, bonds and stocks. Allocation of savings. What is diversification? Relation of capital flows to the balance of trade. NX + KI = zero. Supply of capital and investment as a supply-demand market. what causes trade deficits and why are they linked?
Chapter 12: What is a recession? an expansion? Who decides when they happen? Okun’s law and the connection between unemployment and output gap. why do short term fluctuations occur?
Chapter 13: The Keynesian Cross. The assumptions of the K model. What is PAE and how to construct the Keynesian cross (on a graph). What is the mpc? How are PAE and Y (output) linked? How do we find short term equilibrium output with the Keynesian cross? What is the multiplier (income-expenditure multiplier) and how does it work (equations)? Methods of countering a recessionary gap or an expansionary gap. Interpretation of these on a graph. How do taxes affect these kinds of gaps? Show with a graph.
Chapter 14: The Fed– how does it try to stabilize or control the economy? Interest rates and the demand for money. Shifting the curve. Supply of money and the equilibrium. Fed control of the nominal interest rate. Federal funds rate– what is it? Discount window lending– what is it? Changing reserve requirements– what is it, how does it work? Can the fed control the real interest rate? How? Use the Keynesian cross to explain how the fed can fight inflation or a recession by shifting the real interest rate. Know the equations for the explanation. (page 399). The monetary policy reaction function for the fed– what’s the equation, graph, how used? What are reasonable estimates for it? What is Taylor’s rule, how was it derived, and how can it be used to predict what the Fed should do?
Chapter 15: Inflation, the AD curve and the AS curve. How can the AD curve shift? (Why?) Movements along the AD curve vs a shift? What is the AD-AS diagram? Why is there inflation inertia? Know the terms and the structures in the AS-AD diagram. Where is short run equilibrium? What happens when there is a recessionary or expansionary gap? Why do we say the economy is self-correcting?
I think we will end about here, and will not have time to go further.
Hope this is helpful. It is a lot, but work the problems.
Supply Chain and Logistics 