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Study_guide_2 - 3 Business Cycles Definition Expansions and...

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EC 302 Exam 2 Study Guide 1 Topics to be covered in Exam2 on Thursday, Novmeber 13. You should also be comfortable with the material covered for the first exam 1. Long Run Growth: The Solow Model Production function: Y = A F(K, N) Finding the per worker production function, y = f(k); y: output per worker k: capital-labor ratio, capital per worker k: change in capital labor ratio s: saving rate; sy: saving per worker c: consumption per worker i: investment per worker; i = sy n: population growth rate d: depreciation rate Finding the initial c, sy, i, and k Finding the steady state ( k=0) k*, y*, c*, sy* Evaluating changes to the steady state from changes Changes in s, n, d, k, A 2. Asset Market Money and Non Money Role of the Federal Reserve Money Supply Money Demand and Non Money Demand: Portfolio decision between money and non money Relationship between price and interest rates Quantity Theory of Money; Velocity Real Money Demand Equation M d /P = L(Y,r+ π e ) Finding equilibrium real money (supply and demand) and interest rate

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Unformatted text preview: 3. Business Cycles Definition, Expansions, and Contractions Dating the cycles, National Bureau of Economics (NBER) 4. IS: Goods Market equilibrium Deriving the IS from desired Saving and desired Investment equilibrium Goods demanded and Goods supplied equilibrium; Keynesian Cross Causes for shifts of the IS curve or movements along the IS curve 5. LM: Money Market Equilibrium Deriving the LM curve from Real Money supply and Real Money demand EC 302 Exam 2 Study Guide 2 6. Short Run Equilibrium of the goods market and money market IS – LM equilibrium 7. General Equilibrium (Long Run Equilibrium) Full Employment Output, Income Equilibrium in all three markets Shifts in the IS, LM, or FE 8. Aggregate Demand – Aggregate Supply Aggregate Demand: Deriving the Aggregate Demand from the IS and LM Aggregate Supply Short Run Aggregate Supply (SRAS) Long Run Aggregate Supply (LRAS)...
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