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ECOn 3 FInal review

ECOn 3 FInal review - Final Review Use the midterm 1 and...

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Final Review Use the midterm 1 and midterm 2 review sheets as your guide for Chapter 16 to Chapter 23. This is your guide for chapter 24 to chapter 27. 1) Chapter 24 a) The Federal Reserve i) Know terms (1) Board of Governors (2) FOMC b) The effect of the Fed on the Economy i) Can the Fed control r? r = I – π Federal Funds Rate ii) PAE & r Exercise 24.3 iii) The Fed Fights a Recession Try end of chapter question 1 iv) The Fed’s Monetary Policy Role (1) Know how to draw graph (2) What happens if Fed lowers (or raises) the target inflation rate? (3) What happens if Fed tightens (eases) MPR? (See Chpt 25 p 717) c) The Demand/Supply of Money i) Know how to draw graph (Figure 24.8) ii) Know what shifts Demand? iii) How does Fed lower i? 2) Chapter 25 a) AD-AS Model i) AD (1) Why is AD downward sloping? (2) What Shifts AD? (Exercise 25.1) ii) AS (1) Why is AS upward sloping? (2) What Shifts AS? (Exercise 25.2) iii) LRAS (1) Why is LRAS vertical? (2) What shifts LRAS? b) What happens if Fed changes MPR? c) What happens to Economy if there is a shock to AS? d) What happens to Economy if there is a shock to AD?
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