FINAL OVERVIEW - Week 10 for Ec 202 Hi Everyone: The final...

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Week 10 for Ec 202 Hi Everyone: The final week of the course is already here -- YIKES! This is likely my last email, so no more Junk Economics 202 emails from me! From my end, it sure seems like the term went quickly. Several items: 1. If you have not already done so, do sign up with SSIL for a date to take the final exam. The last day to take the exam is Thursday, June 14th. 2. SSIL is now set up to receive Online Course Evaluations. You can evaluate this course by going to your distance ed homepage, noting that the first topic listed is the Course Evaluation for this class. Such evaluations are especially useful given the unique online nature of this course. 3. I repeat the SUMMARIES, CHECKLISTS, AND PRACTICE QUESTIONS AND ANSWERS I emailed last week at the end of this email, for both the new Chapters 15, 16 (pages 360-69 only), and 17 (pages 382-90 only) and the review chapters that are covered on the final. Hope all of your finals go well! Donghyun Lee A. The SUMMARIES, CHECKLISTS, AND PRACTICE QUESTIONS AND ANSWERS on the new Chapters 15, 16, and 17 are summarized next (with the number of questions on the final exam noted in parentheses). 1. CHAPTER 15: SHORT RUN TO THE LONG RUN (12 questions) . SUMMARY: Thus far in the book we have discussed how the level of factors of production determines output and prices are determined by aggregate demand in the long run (Classical macroeconomics). In the short run (Keynesian macroeconomics), we assume constant prices allowing output to be determined by demand. These two models are extremely powerful at describing the effect of monetary and fiscal policy. Often we see that short run policies to increase output (an increase in consumption increases output) will have deleterious long run effects (reduced savings lowers per capita output). However, the intermediate run, the transition from the short to the long run, remains to be explained. This chapter explains how the economy makes the transition from the short run to the long run. It also highlights why monetary and fiscal policies have different effects in the short run than they do in the long run. Understanding the distinction between the short run and the long run is critical to evaluating economic policy. Here are the main points to remember from this chapter:
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1. When output exceeds full employment, wages and prices rise faster than their past trends. If output is less than full employment, wages and prices fall relative to past trends. 2. The price changes that occur when the economy is away from full employment push the economy back to full employment. Economists disagree on the length that this adjustment process takes, with estimates ranging from two to six years. 3.
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This note was uploaded on 04/09/2008 for the course EC 202 taught by Professor Online during the Spring '07 term at University of Oregon.

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FINAL OVERVIEW - Week 10 for Ec 202 Hi Everyone: The final...

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