REVIEW
GUIDE for the THIRD EXAM: spr=
ing
2009
the MACROECONOMY =
in the
SHORT RUN
&nbs= p;
&nbs=
p; Economic Fluctuations
&nbs=
p; Aggregate
Demand
&nbs= p; &= nbsp;
&nbs= p; &= nbsp; Wealth, interest rate and exchange rate effects: along the curve
&nbs= p; &= nbsp;
&nbs= p; &= nbsp; shifts in the Aggregate Demand curve
&nbs= p; &= nbsp;
&nbs=
p; Aggregate
Supply
&nbs= p; &= nbsp; Vertical in the long run – why
&nbs= p; &= nbsp; Upward sloping in the short run
&nbs= p; &= nbsp; &nbs= p; misperceptions, sticky wages and sticky prices theorie= s
&nbs= p; &= nbsp; &nbs= p; shifts in the short run aggregate supply curve
&nbs= p; &= nbsp; &nbs= p; &= nbsp; changes in price level expectations!
&nbs=
p; Short
run macroeconomic equilibrium
&nbs= p; &= nbsp; intersection of AD and short run AS
&nbs= p; &= nbsp; shifts in either AS or AD or both: impacts on key vari= ables
&nbs= p; &= nbsp; why the economy eventually moves towards the Long Run = Agg Supply
FISCAL and MONETARY POLICIES in the SHORT RUN =
&nbs= p; Monetary Theory: theory of liquidity preference
&nbs= p; &= nbsp; &nbs= p; money s= upply, demand and equilibrium
&nbs= p; &= nbsp; &nbs= p; impact = on aggregate demand
&nbs= p; &= nbsp; &nbs= p; recent = FED policy analysis
&nbs= p;
&nbs=
p; Fiscal
Policy
&nbs= p; &= nbsp; Government spending: multiplier and crowing effects on aggregate = &nb= sp; demand
&nbs= p; &= nbsp;
&nbs= p; &= nbsp; Changes in Taxes: impact on aggregate demand
&nbs= p;
&=
nbsp; Activism versus Non-ac=
tivism
&= nbsp; &nbs= p; Activism: « use » fiscal/monetary policy to change aggregate de= mand
&nbs= p; &= nbsp; Non-activism: rely on “self correcting” shift in short run agg. supply
UNEMPLOYMENT and INFLATION
&nbs= p; the Phil= lips relationship: why downward sloping in the short run
&nbs= p; &= nbsp; &nbs= p; = relate to AD-SRAS diagrams
the Phil= lips curve: vertical in the long run
short run long run interact= ion
&nbs= p; &= nbsp;