Review2 - Macro Review Sheet for Exam 2: Fall 2006 1....

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Macro Review Sheet for Exam 2: Fall 2006 1. Business cycle, its phases, peak and troughs, recession – definition, National Bureau of Economic Research (NBER) 2. Civilian population, labor force, those not in labor force, employed, unemployed, unemployment rate, employment rate, labor force participation rate, what does not unemployment rate measure? Discouraged workers, natural rate of unemployment, cyclical unemployment, structural unemployment, and frictional unemployment 3. Inflation, measurement – CPI, the limitation of CPI, price index, nominal v. real money balance, real value of a nominal balance, nominal v. real interest rate, anticipate v. unanticipated inflation, how unanticipated inflation transfers income from borrower to lender or vice versa? Calculation of price index and calculation of inflation rate, and calculation of real value 4. AD-AS model; the reasons for downward-sloping AD – real balance effect, interest rate effect, and international substitution effect, what distinguishes short run from
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