Intermediate
Macroeconomics
Review for Quiz 1
Introduction
What are the three big problems
macroeconomics studies?
GDP
-- Calculation,
intermediate;inventories;used;GNP
-- Real v.s,Nominal (deflator; CPI)
Okun’s Law
National Income
(Classical Model)
Assumptions
-- L & K are fixed
-- technology is fixed
-- production fn diminishing marginal product
-- perfectly competitive firm
-- no transfer payments
-- T is fixed
-- G is fixed
National Income
(Classical Model)
Supply for goods and services
---profit Maximization
? MPL,MPK
? L or K income
Demand for goods and services (Y=C+I+G)
Equilibrium
Loanable funds market (graph & shifts)
Unemployment
Natural rate of unemployment
-- definition & calculation (meaning of s & f)
Reasons for unemployment
-- frictional (takes time to match jobs e.g,
technology improvement; sectoral;
geographical) & policy analysis
-- wage rigidity (3 reasons)
Money
Functions
Measure
Monetary theories (3)
Inflation
Interest rate
The Fisher effect
Demand for money
How to stop hyperinflation
Social costs of inflation (expected & unexpected)