ECO 2013 Final Exam Study Guide Summary

Fundamental Economic Concepts

• Demand and Supply (Chapter 3):

  • Law of Demand

  • Law of Supply

  • Distinguish between shifts and movements

  • Substitutes and complements

• Market Equilibrium (Chapter 3):

  • Equilibrium price and quantity

  • Adjustments to surpluses and shortages

• Opportunity Cost (Chapters 1 & 2):

  • Concept of trade-offs

• Market System (Chapter 2):

  • Difference between product and factor markets

Core Macroeconomic Concepts

• Nominal vs. Real GDP (Chapter 8):

  • Components of GDP: $Y = C + I + G + NX$

• Inflation Calculation (Chapter 9):

  • Consumer Price Index (CPI)

• Unemployment Rate (Chapter 9):

  • How to calculate

• GDP Deflator (Chapter 8):

• Nominal GDP Growth Rates (Chapter 10):

• Determinants of Long-Run Economic Growth (Chapter 10):

Economic Models and Analysis

• Aggregate Expenditure Model (Chapter 12):

  • Components: consumption (C), planned investment (I), net exports (NX)

  • Short-Run Macroeconomic Equilibrium using the 45° line

  • Marginal Propensity to Consume (MPC), Multiplier Effect

• Aggregate Demand and Supply (Chapter 13):

  • Variables that shift both AD and SRAS curves

Money and Monetary Policy

• Functions of Money (Chapter 14):

  • Medium of exchange, unit of account, store of value

• Monetary Policy Tools (Chapter 15):

  • Managing money supply and interest rates

• Expansionary vs. Contractionary Policies (Chapters 15 & 16):

  • Analysis of effects on economy

International Economics

• Comparative Advantage (Chapter 2):

  • Opportunity cost method

• Net Exports (Chapters 12 & 13):

  • Impact of exchange rates and tariffs

Conclusion

• Effectiveness of Policies:

  • The role of monetary and fiscal policies in managing economic cycles and growth.