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. economy’s 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 nation’s 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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This note was uploaded on 06/19/2011 for the course ECO 102 taught by Professor - during the Spring '10 term at Sam Houston State University.

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Review_for_Midterm - Review for Midterm Introduction to...

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