Study Guide for Test #2

1. Be able to calculate the optimal markup on a product

2.  Know the different models of price discrimination

3.  Know how price discrimination is implemented in practice

4.  Be able to calculate the extra profit that results from bundling products

5.  Know how to calculate various components in the national income accounts

6.  Know how to calculating different price indexes (GDP deflator, Consumer Price Index, Producer Price Index)

7.  Be able to use price indexes to measure inflation

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

9.  Be able to calculate the unemployment rate, labor force participation rate, and employment-population ratio

10.  Understand the impact of different factors on the components of aggregate expenditures

11.  Know how changes in the exchange rate affects imports and exports

12.  Be able to show how the equilibrium in an economy is determined

13.  Understand the market forces that lead to equilibrium from disequilibrium situations

14.  Understand how the simple deposit multiplier is calculated and used

15.  Understand how the money multiplier is calculated and used

16.  Know how open market operations can be used to affect the money supply

17.  Know how changing the discount rate and the reserve requirement can be used to affect the money supply

18.  Understand how equilibrium in the money market is determined

19.  Be able to show how monetary policy affects the aggregate demand curve

20.  Be able to show how fiscal policy affects the aggregate demand curve

21.  Be able to show how other factors affect the aggregate demand curve

22.  Know what is meant by the term structure of interest rates and the yield curve (also be able to show graphically)

23.  Understand how lags affect monetary and fiscal policy

24.  Understand and be able to show graphically the distinction between the short-run and long-run aggregate supply curve

25.  Be able to use aggregate supply-aggregate demand analysis to evaluate the impact of different events, including monetary and fiscal policy

26.  Know the factors that affect the supply of and demand for foreign exchange

27.  Be able to use supply and demand analysis to show how events would affect the exchange rate

28.  Understand what is involved with different exchange rate systems

29.  Be able to show what is necessary to maintain a fixed exchange rate system

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30.  The following question will be on the exam.  If you want, you can prepare it in advance and submit it the day of the exam.

In your opinion, how serious is the problem of the federal budget deficit and the national debt in the United States? Incorporate a discussion of the issues surrounding deficits and the debt in your answer. Whether or not you think it is significant, show the impact of crowding out due to the deficit.

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Recommended Problems

Chapter 10 - 1, 2, 3, 6, 8

Chapter 11 - 6, 7

Chapter 12 - 3, 5C (calculate multiplier and change in equilibrium income)

Chapter 13 - 3

Chapter 14 - 2

Chapter 15 - 1

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Answers to recommended problems