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E202+exam+1+review+sheet+IU - Know the difference between...

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Ch7. Know the definitions unemployment & inflation.  Know the costs of both: unemployment-lost  production; inflation- dollar worth less.  Know the formula for unemployment and labor force  participation rate.  Know the 4 types on unemployment and be able to give an example of  each.  Know how discouraged workers affect the unemployment rate. Know the difference between real and nominal values and be able to use the formulas for a  price index, real interest rates and real GDP.  Note: there are two variations. 1. Quantity is  fixed.  2. Quantity changes.   Know who wins and loses with inflation/unemployment and how  to protect yourself against inflation (COLA) Ch8. Know the definition GDP.  Know the two ways to measure: Income: w + i + r + p + IBT +  Deprec.  and expenditure: C + I + G + X.  Know the formula for value added.  Know what’s  included or not in GDP.  Know the difference between GDP & GNP.
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Unformatted text preview: Know the difference between real and nominal values and be able to use the formulas for real GDP. Note: there are two variations. 1. Quantity is fixed. 2. Quantity changes. Know the two ways to adjust nominal GDP: inflation and population. Ch9. Know why small growth rates matter and be able to discuss the positive and negative aspects of economic growth (more jobs, pollution, etc). Know the five things that cause economic growth: # of resources, productivity, education, savings, technology (new growth theory). Also, the four keys to economic development: education, property right, allow for failure and trade. Know the aggregate production function model and be able to explain shifts vs. movements along as well as how it illustrates economic growth. Hope this helps. Good luck....
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