Here’s a cut at what you may find important for the exam. It covers chapters 10-15 and you are allowed a single 8.5 x 11 inch both sides sheet of notes. The exam will be designed for 1 hour but you will have two to take it.
Chapter 10
Money, how a reserve system generates a larger money supply. The fed and what can it do? (three types of operations). What is the velocity of money and why is MV = PY important? What does it mean?
Chapter 11
The Financial System; bonds, stocks. What are the terms used in the bond trade and how do we calculate the current value of a bond? How do we calculate the value of a stock which pays a dividend? what role do bond and stock markets play (information, risk sharing) how does it work? Why is diversification good? What determines international capital flows? why is S + KI = I in the GDP equation? What is the supply and demand picture for an open economy? How does the savings rate relate to the trade deficit?
Chapter 12 short term economic fluctuations
Recessions and expansions– how do we call them and who dies it? what do cycles of recession and expansion look like since 1999 for instance? What is the output gap? What is the natural rate of cyclic Unemployment and the unemployment gap? What is Okun’s law? Be precise! Why do short term fluctuations occur?
Chapter 13 Spending and output in the short run
The Keynesian cross and PAE, its definition, what’s the equation and what are the parts, how does it relate to Y? what is the Keynesian cross diagram and the mpc? What is the multiplier? what does all this let us predict?What happens if there is an increase or decline in PAE? What could cause that? How does Government Spending, Taxes and Transfers, and other Fiscal measures affect the equilibrium? Why is fiscal policy inflexible?
chapter 14 Role of the Fed
Supply and demand for money. Consuelo’s balance sheet. How does the fed control the interest rate? History of the fed funds rate 1970-2005. Discount window lending. Effects on the economy. Explain how the fed fights inflation and a recession, suing the K-cross. What is the fed’s policy reaction function (what are its terms, what does the equation say, what does the graph look like, what are the axes?) We did not discuss the Taylor Rule.
Chapter 15 AS-AD theory
Why do we need it? The AD curve. What happens when the fed chooses a new reaction function? (fig 15.4) What is movement along the AD curve mechanism? What can cause a shift in the AD curve? What happens then? Why is there inflation inertia? How does the output gap relate to inflation? Draw and reason with SRAS and LRAS curves. What are inflation shocks? What can cause shocks to output? Show the effects on an AS-AD diagram. Fiscal policies, and their effects on the supply side as well as the demand side. Why do Americans work longer hours than europeans?
I hope this covers it. You have the assignments to work on through ch 15 and Iwill make sure the answers are there. Good studying!
Supply Chain and Logistics 