FUNDAMENTALS OF BUSINESS ECONOMICS

Study Guide for Test #1

I'll formulate the study guide in terms of learning objectives for the first part of the class:

1.  Know the characteristics of the GDP

2.  Know the shortcomings of calculating the GDP

3.  Know the different components of macroeconomic expenditures

4.  Know what happens at the macroeconomic equilibrium

5.  Understand how the circular flow model can be used to explain recessions, along with the impact on various variables

6.  Be able to calculate the unemployment rate, the labor force participation rate, and the employment rate.

7.  Understand the different types of unemployment and how they relate to the natural rate of unemployment

8.  Understand the shortcomings of the unemployment rate

9.  Know how to calculate nominal vs. real GDP

10.  Know how to calculate the different price indexes (GDP deflator, Consumer Price Index, Producer Price Index)

11.  Understand the problems surrounding the CPI

12.  Know how to calculate the compound annual inflation rate

13.  Be able to use price indexes to calculate real values

14.  Be able to show the various parts of the business cycle

15.  Understand the difference between procyclical, countercyclical, and acyclical variables

16.  Be familiar with the various measures of the money supply

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Recommended problems:

Chapter 2 - 10

Chapter 3 - 4

Chapter 4 - 3a, 4, 12

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Answers to recommended problems