macroeconomics

Module 16: Income and Expenditure -The nature of the multiplier, which shows how initial changes in spending lead to further changes -The meaning of the aggregate consumption function, which shows how current disposable income affects consumer spending -How expected future income and aggregate wealth affect consumer spending -The determinants of investment spending -Why investment spending is considered a leading indicator of the future state of the economy ? Assumptions: 1. We assume producers are willing to supply additional output at a fixed price causing changes in overall spending translate into changes in aggregate output 2. We take the interest rate as given 3. We assume that there is no government spending and no taxes

Chapter 12: The Meaning and Calculation of Unemployment ? -How unemployment is measured -How the unemployment rate is calculated -The significance of the unemployment rate for the economy -The relationship between the unemployment rate and economic growth ? Employed: people who currently hold a job in the economy, either full time or part time/ only if you have a job Unemployed: people who are actively looking for work but aren?t currently employed Limitations: Retired people Disabled Hasn?t actively searched for a Job in the last 4 weeks Discouraged workers Marginally attached workers Underemployed U.S. Census Bureau monthly survey called the Current Population Survey: interviewing a random sample of 60,000 American families

Chapter 13: The Causes and Categories of Unemployment ? -The three different types of unemployment and their causes -The factors that determine the natural rate of unemployment ? 1. Frictional Unemployment: unemployment due to the time workers spend in job search Somewhat inevitable- frictional unemployment doesn?t mean that there is a surplus of labor Constant process of job creation and job destruction New workers are always entering the labor market Limited amount is relatively harmless and may be a good thing Short duration of unemployment Job search: Workers who spend time looking for employment/ if all workers and all jobs were alike job search wouldn?t be necessary 2. Structural Unemployment:

Chapter 11: Interpreting Real Gross Domestic Product ? -The difference between real GDP and nominal GDP -Why real GDP is the appropriate measure of real economic activity ? GDP: a measure of the size of the economy represents increase in prizes of goods and services rather than an increase in output provides a good way to compare the size of different economies but not a good measure of the economy?s growth over time can grow to economic expansion or just inflation Real GDP: measures actual changes in aggregate output/ adjusted for price changes total value of all final goods and services produced during a given year calculated using the prices of a selected base year (assumed prices stay constant)

?? Chapter 7: Supply and Demand: Changes in Equilibrium ? substitutes: if the price of good1 rises, the demand for good2 will increase if the price of good1 falls, the demand for good2 will decrease An increase in demand leads to a rise in both the equilibrium price and the equilibrium quantity. A decrease in demand leads to a fall in both the equilibrium price and the equilibrium quantity. Increase in demand: rightward shift of the demand curve market is no longer in equilibrium shortage: quantity demanded exceeds quantity supplied price rises increase in the quantity supplied upward movement along the supply curve new equilibrium When demand for a good or service increases, the equilibrium price and the equilibrium quantity of the