Review_for_Midterm

Review_for_Midterm - Review for Midterm Introduction to...

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Unformatted text preview: Review for Midterm Introduction to Macroeconomics ECO 111 March 9, 2010 The Introduction Topics Three of the major concerns of macroeconomics: unemployment, inflation and output growth. What is inflation, what are different types of inflation Deflation, stagflation, hyperinflation What is the business cycle? Different phases in the business cycle: expansion, peak, recession/contraction, trough A Typical Business Cycle EXPANSION AND CONTRACTION: THE BUSINESS CYCLE The Introduction Topics Definition of recession ( a period in which aggregate output declines for two consecutive quarters is defined as recession.) What is the U.S. economys long run growth rate? What is the trend growth line? (Between 1900 2004, the US economy grew at an average rate of 3.4% per year.) The Introduction Topics Role of Government: fiscal and monetary policies Fiscal policies are Government policies concerning taxes and expenditures (spending). What are expansionary and contractionary fiscal policies? Monetary policy is the behavior of the US Central bank, the Federal Reserve, concerning the nations money supply and interest rates. What are expansionary and contractionary monetary policies? The Introduction Topics Economic Systems: Command system, Laissez faire, Mixed systems Command economy is an economy in which a central government either directly or indirectly sets output targets, incomes, and prices. Laissez-Faire (Economies or Free Market economies) is an economy in which individual people and firms pursue their self interests without any government intervention A Mixed economy is an economic system that incorporates aspects of more than one economic system; The Introduction Topics : Demand and Supply in Output Markets Factors that affect demand price of the product Income Wealth prices of other products tastes and preferences expectations about future income, wealth, and prices Law of demand and Law of Supply What are the factors that cause the demand and supply curves to shift? The Introduction Topics...
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Review_for_Midterm - Review for Midterm Introduction to...

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