FinRev - Final Review Chapters 5-15(MACRO Ch 5 Price Floor...

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Final Review – Chapters 5-15 (MACRO) Ch. 5 Price Floor in (unskilled/ entry-level) labor market: Minimum Wage. See Minimum Wage and section and Immigrant Labor Market Project in Chapter 5 of the book. Protectionism through quotas or tariffs/ which price control is not protectionism? Alternative allocative mechanisms Ch. 6 Four stages of a business cycle Durables vs. non-durables in a recession How NBER declares the start/end dates of a recession Several questions on Calculating and Modifying U-Rate (e.g. like Question 1 in Report 1) AD/AS graph, including cost-push vs. demand-pull inflation AD=C+I+G+Xn Winners and losers from (especially unexpected) inflation Ch 7 Output excluded from GDP: Illegal Volunteer Household (chores, construction, cooking/cleaning/driving) DI=PI-PT Ch 8 Malthusian Prophecy, Classical theory and equilibrium at the stationary state are all implied diminishing marginal returns Intensive vs. Extensive sources of economic growth Per-capita output growth rate = GDP growth rate-pop.growth rate New Growth Theory relies on Learning by Doing, Positive Externalities, network externalities and increasing returns to scale. Ch. 9 Until the Depression, the dominant economic theory in developed nations was Classical This theory held that an economy would naturally tend toward FE GDP. This is also based on a very competitive economy. Classical economists prescribe that G=T, both are small relative to GDP, and Laissez-Faire (non-interventionist) policy. They held that: Demand will bounce back from external shocks (wage price flexibility keeps RW constant) 1
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Shocks to spending are neutralized by the interest rate (abstinence theory of interest) Supply and demand will be balanced because S creates D (Say’s Law) Thus, a shock may cause an economy to be inflationary or recessionary temporarily, but
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FinRev - Final Review Chapters 5-15(MACRO Ch 5 Price Floor...

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